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Governor Signs Unemployment Bill Into Law

On March 9, 2012, Governor Abercrombie signed Act 006 into law.  This new law contains two major components.  First, it artificially sets the Unemployment Insurance (“UI”) tax rate for employers at a lower schedule for 2012 than would have otherwise been required by law.  Without Act 006, employers would have been placed on what is known as Schedule H for 2012.  Under Act 006, however, employers will be placed on Schedule F instead.

You can view a copy of all the UI tax schedules here, but in a nutshell, Schedule A is the lowest tax schedule (meaning it has the lowest UI contribution rates) and Schedule H is the highest tax schedule.  The UI tax schedule is set every year by the Department of Labor and Industrial Relations (“DLIR”), and is based upon the amount of money contained in the state’s UI fund.  Generally speaking, if there is more money in the fund, employers are placed on a lower tax schedule.  If there is less money in the fund, employers are placed on a higher tax schedule.

By being placed on Schedule F instead of Schedule H for 2012, employers are expected to save approximately $550 per employee, depending on where they fall within the tax schedule.

The second component of Act 006 (re)increased the maximum amount payable to people who are collecting UI benefits to 75% of the average weekly wage for April 2 through December 31, 2012.  Without Act 006, the maximum amount payable to UI claimants would have been 70% of the average weekly wage.  This 5% difference equates to about $26 per week.

The bill became effective upon the Governor’s signature, retroactively to January 1, 2012.  The DLIR is currently in the process of conducting experience ratings for employers and mailing out the experience rating notices.

You can view the Governor’s press release here, and a copy of the new law here.