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The Business Council supports this legislation that increases the degree to which state unemployment insurance taxes are based on an employer’s experience rating, thereby making UI tax payments more reflective of the degree to which an employer utilizes the unemployment insurance system.
This objective is achieved by restoring the bottom six “rungs” of the UI tax tables that were repealed as part of a broader reform and refinancing package adopted in 2013.
The state’s UI tax tables are set forth in Labor Law section 581 and consist of 12 columns, reflecting the size of the overall UI fund balance, and 62 rows, which related to individual employer’s “account percentage” – a figure that compares their UI tax balance (payments minus benefit payments) to their average quarterly payroll.
Under the UI tax table system, overall UI tax level go up and down based on the aggregate state UI fund balance, while individual employer’s tax rates also change based on the degree to which their former employees receive UI payments. In other words, employers who have the highest rate of employee turnover, and whose former employees are receiving UI benefits, are subject to higher tax rates; and employers with the fewest layoffs pay lower tax rates.
This legislation would serve to reduce or eliminate the UI taxes paid by employers with the lowest rate of turnover and with the highest account percentages. Since these employers rarely pay UI benefits, there is no need to requiring additional tax payments that further add to their account balances. Importantly, due to the self-adjusting nature of the UI tax tables, if the overall state UI fund balance decreases sufficiently, even employers with the best experience ratings will see UI tax increases.
Moreover, a multi-step, 63% increase in the state’s UI taxable wage base (also adopted in 2013) will generate increased UI tax revenues, making the state’s UI fund more sound and stable, and making future state UI fund deficits less likely.
While this legislation will change the relative level of UI taxes paid by employers, it in no way impacts benefit levels paid to UI recipients, nor alters UI eligibility standards.
The state’s 2013 UI reform package has proved successfully, bringing the state’s UI fund back into balance, and eliminating prior federal borrowings. Given that progress, and the additional taxable wage base increases that will continue to phase-in through 2026, the fund can well afford this legislation, which restores tax fairness for New York employers.
For these reasons, The Business Council supports adoption of S.6777.