April 9, 2021
RAM Employers to Experience Sizable
Increases in Q1 UI Tax Bills
RAM members are now receiving their first quarter unemployment insurance tax bills. Despite the state’s recent decision to freeze the employer contribution rate for two years to avoid a 60% increase, employers are seeing a significant increase in their tax liability due to a sizable increase in the program’s solvency fund assessment. The assessment, which normally pays certain socialized system costs like dependency allowances and claims from businesses that have closed, is now being utilized to cover COVID-related layoffs in a socialized, non-experience rated manner. As a result, the assessment which was 0.58% in 2020, is 9.23%.
In an effort to mitigate the impact of these socialized costs being charged to employers, RAM has continued to advocate for the state to use some portion of the billions of dollars in recovery funds, soon to be received from the federal government, to bolster the UI trust fund. As these costs are primarily the result of state and federal government decisions to enhance and expand UI benefits and shut down private business operations during the pandemic, it is only fair that government take on a shared responsibility in this manner.
Our federal and state elected leaders determined eligibility, the emergency benefits (which for most recipients resulted in more income than they earned on the job), and the business restrictions over what will be at least a year and a half period. Therefore our federal and state leaders should not expect employers to cover the entire $5 Billion UI Trust Fund deficit for layoffs triggered by government decisions, not those of business owners.
Today a coalition of business groups, spearheaded by RAM, submitted a letter to federal and state elected officials again alerting them to this problem and renewing the request for tax relief. RAM members are strongly encouraged to take similar action by contacting their Congressional Representatives and Senators , state legislators and the Governor, asking that they support the use of federal recovery funds to ease this tax burden. For your convenience, RAM has prepared a voter voice campaign which you can use to facilitate your communication.
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