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AIM, Citing Safety Concerns, Opposes Criminal Justice Bill

Posted by Brad MacDougall on Oct 25, 2017 10:00:00 AM

Associated Industries of Massachusetts (AIM) this morning announced its opposition to the state Senate’s criminal justice reform bill because the measure would unduly restrict the ability of employers to ensure the safety of employees, customers and others in the workplace.

ScalesofJusticeVerySmall.jpgThe proposed legislation will, in fact, harm the very people the proponents of the bill seek to help. AIM-member employers met with the legislative sponsor of the bill in July and made clear that candidates for jobs are less successful in achieving gainful employment when employers have less information.

“An employer is more likely to hire an ex-offender when that employer has the information available to make a balanced decision,” said John Regan, Executive Vice President of Government Affairs at AIM.

AIM has a long history of involvement with efforts to balance the need for employers to conduct responsible criminal background checks with the ability of offenders to find employment.

The association helped to forge the 2009 Criminal Offender Records Information (CORI) legislative compromise and worked on the recent regulatory changes to CORI. The business community made significant concessions in the 2009 bill, but the current legislation goes far beyond what employers agreed to in 2009.

Employers believe that criminal background checks are necessary to ensure that the company or institution is complying with state and federal regulations, in addition to international standards. These standards apply for a variety of businesses including hospitals and financial institutions.

Employers also believe that inability to access criminal histories makes companies vulnerable to claims for everything from negligent hiring and failure to meet regulatory obligations to failure to protect client data and failure to protect visitors from harm.

“Employers face significant risk and legal liability for hiring and retaining employees who pose a risk. As written, the legislation does not acknowledge that employers would still be responsible for negligent hiring and negligent retention without a waiver of liability,” Regan said.

The Senate is expected to debate S.2185 and several amendments tomorrow.

Takeaways:

 

Topics: Massachusetts senate, Employment Law, CORI

Health Reform Must Address Employer Costs

Posted by Katie Holahan on Oct 24, 2017 11:33:45 AM

Associated Industries of Massachusetts (AIM) is pleased that the state Senate on Monday conducted a hearing on a proposal to address the challenging issue of healthcare affordability. The primary question for AIM in evaluating any such proposed legislation is whether it eases the burden of employers struggling to provide good health insurance to workers.

health_care.jpgIn 2006, employers joined with doctors, hospitals, patient advocates, and lawmakers to forge a health-reform law that required everyone to share the responsibility for improving access to health care. Eleven years later, Massachusetts residents enjoy the highest levels of health-insurance coverage in the nation.

Yet we have failed to make progress to contain the unsustainable increases in health-care costs.

According to the most recent data available from the Centers for Medicare and Medicaid Services (CMMS), Massachusetts was the second highest-spending state for health care in 2014, shelling out 30 percent more than the national average.

Personal health-care spending in Massachusetts, per capita, has increased more than 12 percent in five years – from $9,417 in 2009 to $10,559 in 2014. Cost growth like this is unsustainable and has increased unabated in the face of attempts by both employers and the commonwealth to contain it.

Businesses, in fact, have almost nothing to show in the way of cost savings and efficiencies five years after Massachusetts made a major push toward health-care cost containment in 2012. The commonwealth has exceeded the 3.6 percent spending growth benchmark established as part of the health-cost control law of 2012 in two of the past four measurement periods.

Total Health Care Expenditures (THCE) grew by 4.2 percent from 2013 to 2014, and by 4.1 percent from 2014 to 2015. These cost increases are occurring in an industry in which experts agree that at least one-third of all care is unnecessary – delivered in the wrong setting; marked by a lack of coordination; provided with an inadequate emphasis on prevention; harmed by medical errors; burdened with rules and fraud; or just plain excessive.

Massachusetts employers have strong ideas about some of the policies included in the draft Senate health-reform legislation:

MassHealth Reforms

In a state facing an alarming deficit in its Medicaid program, employers are currently shouldering the escalating costs of the public health-care system. For the next two years, employers statewide will provide at least $200 million annually in funding for MassHealth in addition to the cost of providing commercial health insurance to their workers.

More importantly, employers are being asked to close a funding deficit absent any of the long-term structural reforms needed to solve the underlying financial problems with the program. Action must be taken to improve the efficiency and cost-effectiveness of this currently unsustainable program.

Optional expanded Medicaid plan

AIM must raise grave concerns with the notion of expanding the MassHealth program through an optional Medicaid plan (SECTION 123) without first addressing existing policies that encourage and sustain needlessly expensive health-care habits.

Employers have long sought to contain costs in commercial health insurance by encouraging cost-effective habits like relying on primary care physicians for non-emergency care. The same cannot be said for the MassHealth program. The inappropriate use of emergency rooms is an example of one major cost driver identified by the Health Policy Commission. To contain costs and facilitate coverage, we must address our greatest cost-drivers in health-care utilization across the entire spectrum of both commercial and public health insurance before we implement any sort of further programmatic expansion.

“Name and Shame” List

AIM also opposes the so-called “Name and Shame” list (SECTION 38), highlighting employers with workers in the MassHealth program. The 2006 health-reform law made employees who were offered employer-sponsored health insurance ineligible for MassHealth. The intent was to balance the requirement that employers do their “fair share” with concerns about the financial burden on the MassHealth system.

The Affordable Care Act (ACA) reversed that policy and allowed income-eligible employees to decline employer coverage and seek insurance through MassHealth. The change created a migration of newly-eligible individuals from their employer-sponsored insurance to MassHealth, substantially increasing the commonwealth’s financial burden. The ACA made public health insurance an economically rational choice for eligible residents in a state known for its expensive health-care system.

Provider Price Variation

Provider price variation includes both reasonable and unreasonable variation in the pricing of health care services. Reasonable variation in pricing should be supported and limited by a transparent marketplace in which consumers have access to clear cost and quality metrics. By mandating a minimum increase in provider prices (SECTION 111) without alleviating existing high-cost drivers, we facilitate the continued increase in price variation without seeking to understand and differentiate among the cost-drivers that result in both reasonable and unreasonable price variation.

Innovative Insurance Products

While we support market-based solutions through innovative insurance products like limited and tiered-network products, we are concerned that the differential limitations alone will be insufficient to leverage this new approach. Without a requirement that all providers participate in the contracting for such products, insurers will not always have the negotiating power to construct products in all regions of the commonwealth.

Scope-of-Practice Expansions

AIM supports the various scope-of-practice expansions included in the draft legislation. Expanding access to vital care from qualified providers for all residents of the commonwealth is a common-sense reform that helps to move us closer to a healthcare system that is efficient and effective.

Telemedicine

AIM supports the inclusion of telemedicine services (SECTION 94) to facilitate innovative, cost-effective health-care services for consumers across the commonwealth. Telemedicine services could provide additional care options for consumers with limited access, preserve productivity, and reduce time lost traveling great distances to providers. A vital component of this policy is requirement that payment for telemedicine services cannot exceed the costs related to an in-person visit. We must prioritize innovative policies that both increase access and decrease costs for residents statewide. Telemedicine should and could do exactly that.

AIM-member employers are active participants in providing health insurance to the majority of residents in the commonwealth. Moderating the cost of that insurance and putting health care on a financially sustainable business is critical to the future of the Massachusetts economy.

Please contact me at kholahan@aimnet.org if you would like to be updated on the progress of health reform in Massachusetts.

Topics: Massachusetts senate, Controlling Health Care Costs, Health Insurance

Senate Creates Roadmap for Debate on Employer Assessment

Posted by Katie Holahan on May 16, 2017 3:36:24 PM

The Massachusetts Senate today sought to define the process through which the Baker Administration might require employers pay for a shortfall in the MassHealth program.

statehousedome.jpgThe proposed Fiscal Year 2018 budget released by the Senate Ways & Means Committee gives the administration a choice of increasing the Employer Medical Assistance Contribution (EMAC) or creating a stand-alone quarterly assessment on employers.

The Senate envisions raising $180 million from such assessments versus the $300 million contained in the governor’s budget. Senators would also limit the life of those assessments to two years.

The approach of creating a roadmap for the administration is similar to the one adopted earlier by the House of Representatives, through the specifics of each proposal differ.

“The Senate Ways & Means Committee took a step in the right direction today by outlining a thoughtful and transparent approach to closing the Medicaid budget deficit. Employers are particularly encouraged that the committee’s budget proposal would raise $180 million from employers instead of $300 million; would provide the Baker Administration with the flexibility to find a solution; and would sunset any employer assessments,” said Richard C. Lord, President and Chief Executive Officer of Associated Industries of Massachusetts.

“The Senate plan again reminds us that the only long-term solution to the Medicaid funding issue is to redouble efforts to control the cost of providing health insurance to our low-income neighbors. Without such an effort, the Medicaid budget gap will continue to grow and divert precious resources from other priorities such as education and infrastructure.”

Lord also urged the Senate to add a provision that would require the Baker Administration to seek a federal waiver allowing Massachusetts to prevent people who receive an offer of health insurance from their employers from purchasing insurance through MassHealth.

The Senate proposal would require Secretary of Administration and Finance Kristen Lepore to file a letter with the Legislature by August 1 indicating whether she will choose the EMAC or assessment option. Regulations must be published by November 1 and take effect January 1 of next year.

Secretary Lepore could either increase the employer assessment for EMAC, an obscure program originally meant to provide health insurance to unemployed people, from .34 percent to .75 percent, or establish a separate employer assessment based upon whether or not an employer offers qualified health insurance and has a minimum uptake rate for that insurance.

The secretary would have  to consider the following in developing any assessment:

  1. how much the employer pays toward the employee’s insurance;
  2. how many employees they have;
  3. whether or not their employees are Massachusetts residents;
  4. how many employees are part-time
  5. whether or not their employees have access to health insurance through different private sources, like parental, spousal, veteran’s, or Medicare, for example.

Governor Baker originally proposed a $2,000-per-employee assessment upon companies at which at least 80 percent of full-time worker equivalents do not take the company’s offer of health insurance, and that do not make a minimum contribution of $4,950 annual contribution for each full-time worker. If 70 percent of a company’s employees accept company health insurance, the company would be assessed $2,000 per employee for the number of employees represented by the 10 percent difference.

AIM has opposed the employer assessment because the growing shortfall at MassHealth, which provides health insurance to 1.9 million low-income Massachusetts residents, is attributable largely to problems arising from the federal health care reform. Federal reform made access to health insurance an entitlement based on expanded income eligibility and significantly expanded the roles of people on Medicaid.

The full Senate will vote on the Medicaid assessment proposal and the rest of its Fiscal Year 2018 budget blueprint later this week. House and Senate will then meet to work out differences.

 

Topics: Massachusetts senate, Health Care Costs, Employer Health Assessment

Power and Collaboration on Beacon Hill

Posted by Rick Lord on Sep 21, 2016 4:27:48 PM

An article in yesterday’s Boston Globe, Business lobby holds new sway on Beacon Hill, accurately reports that Associated Industries of Massachusetts exerts unique influence on Beacon Hill on behalf of employers.

statehousedome.jpgWe do. That’s why your company is a member.

Unfortunately, the article also distorts AIM’s position on an important piece of legislation - the Pregnant Workers Fairness Act – and contains a glaring factual error. I feel it is important to set the record straight.

The article reports that AIM opposed The Pregnant Workers Fairness Act during the 2015-2016 legislative session. But the article does not tell you that our opposition reflected legitimate concern among employers that the legislation duplicates existing law and provides an applicant or employee with the power to reject multiple and reasonable offers of accommodation by an employer.

The issue is similar to the recent debate over wage equity, in which AIM initially opposed a flawed bill meant to accomplish a goal we all supported. Far from exercising “veto power” over the House of Representatives, as one senator asserted to the Globe, AIM was able to work with House Speaker Robert DeLeo and the attorney general to develop an acceptable piece of legislation that we were ultimately proud to support and that Governor Charlie Baker signed.

The Globe article fails to mention that AIM has signaled the Legislature that we are willing to enter into the same type of negotiations on the Pregnant Workers Fairness Act. AIM executives told reporter Frank Phillips on several occasions that the association supports fair treatment of pregnant women and is open to discussions to eliminate provisions of the bill that would place an undue burden on employers.

The article also inaccurately reports that Cape Air, the business owned by retiring Senator Dan Wolf, D-Harwich, is a member of Associated Industries of Massachusetts. For the record, Cape Air has not been a member of AIM since 2003.

As member employers you should be proud of that AIM represents your interests with unparalleled skill and integrity. You should also acknowledge that the Massachusetts House of Representatives is developing workable legislation for the people of Massachusetts by working collaboratively with the business community.

The bottom line of the Globe article is that no organization is more prominent in public policy debates that AIM.

Please contact me if you have any questions about the article or AIM’s positions.

 

Topics: Associated Industries of Massachusetts, Massachusetts senate, Massachusetts House of Representatives

Legislative Scorecard Paints Tale of Two Chambers

Posted by John Regan on Aug 29, 2016 7:35:05 AM


Associated Industries of Massachusetts (AIM) today released its 2015-2016 Legislative Scorecardd, the most widely read report on the voting record of Massachusetts legislators on issues important to employers. AIM releases the Legislative Scorecard at the end of each two-year session to ensure that members know legislators’ records on key economic and public-policy issues, and to recognize lawmakers who understand the importance of a vibrant economy for all residents.

Scorecard2016.jpgThe 2015-2016 legislative session was a tale of two chambers. While the House of Representatives and Speaker Robert DeLeo successfully forged consensus on important measures such as wage equity and energy, the Senate hewed to a more progressive, ideological approach that produced a steady stream of bills with the potential to harm the Massachusetts economy. The divergent approaches are reflected in the Legislative Scorecard results.

Virtually every member of the House of Representatives earned grades of 50 percent or higher and 126 reps ended the session at 75 percent or better. The ratings were based on a dozen roll-call votes dealing with issues ranging from economic development to restricting the use of non-compete agreements.

In the Senate, meanwhile, only five of 40 members managed grades above 50 percent and a staggering 15 Senators posted scores of 18 percent. The highest score in the Senate belonged to Senator Don Humason of Westfield at 59 percent.

The Senate scores were based upon many of the same issues debated by the House, as well as additional votes on so-called wage theft and efforts to modify the commonwealth’s punitive treble damages law. Two key Senate votes – on energy and non-compete agreements – were not included because they were conducted as voice votes.

The Legislative Scorecard selects votes that reflect the objectives of The Blueprint for the Next Century, AIM’s long-term plan for economic prosperity in Massachusetts. The plan maintains that only a vibrant, private-sector economy creates opportunity that binds the social, governmental, and economic foundations of our commonwealth.

The Blueprint contains four specific recommendations against which AIM measures public policy issues:

  1. Develop the best system in the world for educating and training workers with the skills needed to allow Massachusetts companies to succeed in a rapidly changing global economy.
  2. Support business formation and expansion by creating a uniformly competitive economic structure across all industries, geographic regions and populations, rather than picking winners and losers.
  3. Establish a world-class state regulatory system that ensures the health and welfare of society in a manner that meets the highest standards of efficiency, predictability, transparency and responsiveness.
  4. Moderate the immense long-term burden that health care and energy costs place on business growth.
"We hope that employers find the Legislative Scorecard informative, and that they will share the results with your colleagues and associates," said Richard C. Lord, President and Chief Executive Officer of AIM.

Topics: Massachusetts Legislature, Massachusetts senate, Massachusetts economy, Massachusetts House of Representatives

Workers Comp Debate Relies on Faulty Numbers

Posted by John Regan on Oct 26, 2015 7:30:00 AM

The Massachusetts State Senate approved a bill on Thursday that would expand eligibility and compensation for injured workers under the law’s disfigurement provision.

statehousedomeThe vote followed a debate characterized by misinformation, inaccuracy and an unwillingness to determine the financial impact that the proposed changes would have on employers, the commonwealth, cities and towns and the workers compensation system as a whole.

Associated Industries of Massachusetts (AIM) opposes the measure and in a letter sent prior to the vote urged senators to examine the costs associated with each change.

Senator Sal DiDomenico, (D-Everett) led the Senate’s debate in favor of the bill.

The bill would expand covered disfigurement injuries to those occurring anywhere on a person's body and raise the current $15,000 compensation for any scar to an amount equal to 22.5 percent of the average weekly salary, or nearly $29,000.

The current system was established under the workers compensation reform act of 1991 as a compromise to ensure that workers compensation covered visible scarring from on-the-job injuries while controlling a major cost factor in the system.  Injuries resulting in disfigurement (as distinct from surgical scarring) are still compensable under Massachusetts law.  The rationale behind the scarring benefit holds that certain scars could affect quality of life post injury and may also affect return to work prospects.

Senator DiDomenico, using data received from the state’s Department of Industrial Accidents, asserted that only 1,936 workers were awarded disfigurement benefits last fiscal year and only $300,000 in benefits were awarded. He further stated that the bill would lead to no more than $500,000 in new costs. 

These figures are just wrong. 

One industry source predicts an impact to premiums in the insured market (not the self-insured or public market) of 3.4 percent or $40 million. Another estimate by an insurance provider, predicted costs could increase by twice the 3.4 percent, or nearly $80 million, because nearly 20 percent of claims involve surgery.

On the public side, (where the Senate Ways and Means Committee suggested there would be zero cost impact) Massachusetts state government spends $54.4 million on workers compensation. That means cost increases ranging between 3.4 to 6.8 percent would increase bills for the commonwealth by $2 million to $3.7 million.

Only Senator Vinny deMacedo (R-Plymouth) voted against the bill, saying he was worried that "little by little, piece by piece, slice by slice" the Senate was making it more challenging to do business in Massachusetts.

AIM agrees. 

We urge the House to review the data more carefully and to listen to those with a firm grasp of the cost implications of the bill.

Topics: Workers Compensation, Massachusetts senate

Senate Declines to Postpone Sick-Leave Law

Posted by Gary MacDonald on Apr 16, 2015 8:30:00 AM

The state Senate yesterday rejected an effort by Associated Industries of Massachusetts to postpone the July 1 implementation of the new paid sick-leave law. AIM sought the delay because employers have no clear instructions on how to comply.

Senate_ChamberSenator Michael Rodrigues, D-Westport, filed a budget amendment that would have moved the effective date of the voter-approved leave law to January 1, 2016. The amendment was withdrawn, however, after it became clear that there was not enough support to pass it.

Attorney General Maura Healey, who is developing the regulations that employers will have to follow, opposed the effort to move the deadline. The Senate’s action raises the probability that the paid sick-days law will take effect three days before final regulations are in place.

Massachusetts voters approved a ballot question on November 4 mandating that employers with 11 or more workers provide 40 hours of paid sick time. Companies with fewer than 11 employees will be required to provide 40 hours of unpaid sick time.

The law has touched off a wave of concern among employers who say that the 75 days remaining until July 1 do not provide them enough time to understand the yet-to-be-published regulations and to program payroll systems to account for the new law. One employer who already has a sick-leave policy in place reports that he needs at least 120 days to work with his payroll company to make the necessary programing changes.

Employers also face a litany of time-consuming administrative issues. For example, an employee who used to accrue 15 days of Paid Time Off (PTO) prorated over each payroll now will accrue 10 days of PTO prorated over each payroll and up to five days of Earned Sick Time (EST) accrued at one hour for every 30 hours worked. And re-characterizing existing time off from accrued PTO to EST may lead to an excess accrual and payout before July 1 to avoid loss of earned time that may not be carried over in excess of 40 hours.

“Massachusetts employers deeply appreciate the effort by Senator Rodrigues to provide adequate time to companies to meet their obligations under a complex new law. AIM worked hard on behalf of its 7,500 member employers to resolve these issues and we are disappointed that the Senate did not act,” said John Regan, Executive Vice President of Government Affairs for AIM.

The proposed delay drew heavy opposition from organized labor, which paid for advertisements saying “Stop the attack on earned sick time for working families.”

The Attorney General’s office is expected to issue draft sick-days regulations later this month. AIM will brief member employers via Webinar on the draft regulations once they are published.

Employers with questions or comments on the paid sick-days law may contact me at gmacdonald@aimnet.org, or Brad Macdougall at bmacdougall@aimnet.org

Topics: Massachusetts senate, Employment Law, Paid Sick Days

Senate Bill Would Expand R&D Credit; Restrict Non-Compete Agreements

Posted by Christopher Geehern on Jul 2, 2014 2:56:00 PM

The Massachusetts Senate approved an economic development bill yesterday that would restrict the use of non-compete agreements and broaden existing tax incentives for companies to conduct research and development.

IntellectualProspertyA legislative conference committee will now hammer out differences between the Senate bill and a similar measure passed several weeks ago by the House of Representatives. The House bill includes neither the non-compete nor the R&D tax provisions.

AIM supports the updated R&D tax credit. The association continues to study the Senate non-compete measure with an eye toward maintaining adequate protections for the intellectual property of employers.

The non-compete compromise would prohibit employers from using the agreements with hourly employees and limit the length of those agreements to six months.

Non-competes would have to be presented at least five business days before the employee starts work, or when any formal offer of employment is first made to the employee. If the agreement is entered into after the person is already employed, but not in connection with separation from employment, it must be supported by fair and reasonable consideration in addition to the continuation of employment, and notice of the agreement must be provided at least 10 business days before the agreement is to be effective.

The Patrick administration and a coalition of venture capitalists have been seeking to ban non-competes altogether, arguing that they inhibit the growth of new companies in the innovation economy. AIM has led the effort to preserve the current law governing the use of non-competes.

Brad MacDougall, Vice President of Government at AIM, says the non-compete issue is really about choice for both individuals and employers, who should be free to negotiate contracts of mutual benefit as long as the employee is a part of the process.

Employees already enjoy legal protection against overly restrictive non-compete agreements, according to MacDougall.  Case law dictates that enforcement of agreements occurs only when they:

  • are narrowly tailored to protect legitimate business interests;
  • are limited in time, geography, and scope;
  • are consonant with public policy; and
  • the harm to the employer from non-enforcement outweighs the harm to the employee.

The Senate bill seeks to reassure employers about protection of intellectual property by adopting a version of the federal Uniform Trade Secrets Act. But the Massachusetts version contains a major problem – it forbids court injunctions with respect to trade secrets “unless the trade secret is specified with sufficient particularity so as to reasonably enable the respondent to prepare a reasonable defense under the circumstances.” 

So an employer would have to specify with “particularity” the trade secrets at issue before obtaining an injunction.  It would be nearly impossible for a company to secure an injunction before a competitor or former employee carries away vital company information.

Massachusetts Secretary and Housing and Economic Development Gregory Bialecki signaled yesterday that the administration is open to compromise on non-competes.

Sen. Michael Rodrigues, a Westport Democrat, disagreed with the provision preventing hourly workers from being subjected to non-compete agreements. Rodrigues argued that in the building trades employers often pay for training and licensing for their workers, and need protection that non-compete agreements offer.

All four Republicans – Sens. Bruce Tarr, Robert Hedlund, Richard Ross, and Donald Humason - and Sens. Rodrigues, Harriette Chandler and Karen Spilka voted against the amendment. 

The R&D tax credit amendment filed by Rodrigues, Tarr and Senator Barry Feingold, would allow employers the option to claim a credit equal to 10 of any research expenses that exceed a base amount calculated over a period of three years. Current law allows credits only for incremental R&D spending over a set base period in the 1980s.

AIM believes the changes are necessary to reverse a troubling 19.3 percent decline in R&D spending among Massachusetts employers between 2007 and 2011. The vast majority of research and development in Massachusetts takes place not in urban innovation districts, but in advanced manufacturing, defense and biopharma companies salted throughout the commonwealth

“And we know that R&D credits work. Massachusetts enacted a set of research and development tax incentives in 1991 that were among the most advantageous in the nation. Over the next five years, R&D spending in the commonwealth increased by more than 50 percent,” said John Regan, Executive Vice President of Government Affairs for AIM.

A recent report from The Pioneer Institute found that overall R&D spending in Massachusetts fell 10.3 percent in the four years ending in 2011. Massachusetts fell further behind chief R&D rival California, which significantly increased its R&D market share on the strength of one of the strongest R&D credits in the nation – 15 percent.

Topics: Massachusetts senate, Non-Compete Agreements, Taxes

State Extends Unemployment Tax Deadline

Posted by Christopher Geehern on Mar 24, 2014 6:21:00 AM

Unemployment InsuranceMassachusetts has extended by one month the deadline for employers to pay first-quarter Unemployment Insurance bills as lawmakers remain deadlocked over the best way to freeze UI rates and head off a $500 million tax increase that took effect January 1.

Both the state Senate and House of Representatives support a rate freeze for 2014, but disagree about how to wrap that freeze into a broader set of reforms to the state’s costly Unemployment Insurance system. House leaders were unable to vote last week on Speaker Robert DeLeo’s UI reform and minimum wage proposal because of a procedural maneuver by the Senate not to extend the time for reporting the bill from committee.

The vote Thursday by the Massachusetts Department of Unemployment Assistance Advisory Committee to postpone first-quarter UI payments until May 30 will give lawmakers additional time to avert a 33 percent rate increase before employers have to pay it.

AIM Executive Vice President of Government Affairs John Regan, who represents employers on the DUA Advisory Committee, said the delay is the only way to prevent hundreds of millions of dollars from being unnecessarily drawn out of the productive economy. The Unemployment Insurance Trust Fund used to pay jobless benefits in Massachusetts currently enjoys a healthy balance of approximately $800 million.

“AIM supports the delay but is disappointed that it is necessary at all.  The UI rate freeze is an agreed upon policy choice that should have been done days, if not weeks ago.  We are still hopeful that a freeze will be taken up sooner rather than later,” Regan said.

“The change in the regulations ensures that employers’ bills are processed in a timely manner and not at the last minute.”

Multiple media outlets reported last week that the House bill would raise the minimum wage to from $8 per hour to $10.50 per hour, freeze unemployment insurance rates for the next four years, and reward businesses with a record of low employee turnover.

The proposal, initially outlined two weeks ago by DeLeo, would:

  • Raise the per-employee taxable wage base from $14,000 to $16,000. A separate UI reform bill passed by in February by the Senate raised the taxable wage base to $21,000.
  • Introduce a new rate table with levels added at each end of the spectrum to decrease the financial burden on high-rated employers with low workforce turnover while penalizing negatively rated employers.
  • Create a new employment fund to be capitalized by an increase in a per-employee tax on businesses and dedicated through grants to community-based job training organizations. The fees would be adjusted to generate $80 million for the fund, up from the existing $18 million cost to business.

Neither the House bill, nor the Senate UI reform passed on February 6, include provisions supported by AIM to reduce the maximum duration of benefit weeks from 30 to 26 or increase the time people must work before collecting benefits.

Regan urged lawmakers to prioritize the 2014 rate freeze and then hammer out their differences over long-term reform.

“Uncertainty is the enemy of economic growth and the impending UI rate increase represents a huge dose of uncertainty for Massachusetts employers,” he said.

AIM has opposed increasing the minimum wage at the state level. The House proposes to increase in the minimum wage to $10.50 by July 2016, and expand the earned income tax credit in Massachusetts from 15 percent of the federal credit to 20 percent, saving taxpayers an estimated $41.2 million to $45.5 million, according to documents prepared by the committee.

Topics: Massachusetts senate, Unemployment insurance, Massachusetts House of Representatives

Senate Seeks Rate Stability with Unemployment Insurance Bill

Posted by John Regan on Feb 6, 2014 5:09:00 PM

The Massachusetts Senate passed an Unemployment Insurance reform bill today designed to stabilize UI tax rates for most employers and make those rates more dependent on the hiring and firing record of individual companies. 

The measure includes an immediate freeze of UI rates for 2014, averting an automatic 33 percent, $500 million tax increase that took effect on January 1.

Dan.WolfAssociated Industries of Massachusetts believes the Senate UI bill represents a constructive first step toward reforming the commonwealth’s burdensome system for paying benefits to jobless people. The association had hoped that the Senate would also reduce the maximum duration of benefit weeks from 30 to 26 and increase the time people must work before collecting benefits, but AIM expects to place those issues front and center when the reform moves to the House of Representatives.

“Senate President Therese Murray and Labor and Workforce Development Committee Chair Dan Wolf (right) deserve credit for taking a thoughtful and creative approach to a seemingly intractable problem. We don’t agree with everything in the bill, but it provides a basis for continuing debate,” said Richard C. Lord, President and Chief Executive Officer of AIM.

Under the Senate bill:

  • The wage base upon which UI payments are calculated would rise from the current $14,000 per year to $21,000 per year in 2015, a change that by itself would escalate costs for employers.
  • An expanded rate table would take effect in 2015, and rates would be set at a new Schedule C for 2015, Schedule A for 2016 and back to Schedule C for 2017. The expanded rate table should offset the effects of the increased wage base for companies with stable employment histories while raising rates for some companies that add and terminate workers frequently. Under the new rates, the most stable employers would pay $153 per employee per year, while the worst-rated companies would pay $2,337 per employee annually.
  • Company UI taxes rates will be based upon the average of three years payroll instead of one, minimizing rate shock for expanding companies or those that encounter cyclical economic problems and find themselves having to lay people off.
  • The definition of seasonal employment is expanded to 20 weeks of work, closing a loophole under which lawmakers say some people work seasonally and then collect Massachusetts unemployment benefits while living out of state during the winter.

“In effect, it’s revenue neutral in that we’ll collect the same amount in aggregate,” said Wolf, a Cape Cod Democrat.

Murray said in a statement: “The current system serves as a considerable burden to our businesses and it is time for change. This bill will alleviate costs for employers, provide predictability to their budgets and foster an environment where jobs can grow and be created.”

House Speaker Robert DeLeo has indicated that his chamber will consider Unemployment Insurance reform in tandem with an increase to the $8-per-hour state minimum wage. The Senate has already passed legislation increasing the minimum wage to $11 per hour over three years and indexing it to inflation thereafter.

The Unemployment Insurance Trust Fund used to pay jobless benefits in Massachusetts currently enjoys a healthy balance of approximately $800 million.

Massachusetts UI costs, driven by high wages, lenient qualification requirements and an overly generous benefit structure, are among the highest in the country. AIM has long supported reducing the maximum duration of benefit weeks from 30 to 26 when the state's economy is performing well and increasing the work requirement for eligibility to collect UI benefits from 30 times the weekly benefit amount to 40.

Topics: Minimum Wage, Massachusetts senate, Unemployment insurance

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