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Beacon Hill Flurry a Mixed Bag for Employers

Posted by Christopher Geehern on Jun 12, 2014 11:41:00 AM

A flurry of activity on Beacon Hill yesterday produced a decidedly mixed bag of legislation for Massachusetts employers.

Non-compete agreementsOn the positive side, a House-Senate conference committee agreed upon a reform of the Unemployment Insurance system that will stabilize UI tax rates and create relief for companies that seldom lay off workers. The agreement came hours after the House of Representatives approved an economic development bill that preserved the ability of employers to use non-compete agreements to protect intellectual property.

AIM remains disappointed, however, that the same conference committee voted to increase the Massachusetts minimum wage from the current $8 per hour to $11 per hour by 2017. Lawmakers rejected a Senate provision to index the minimum wage to the rate of inflation, but required that the state wage be 50 cents more than the federal minimum.

The Unemployment Insurance reform will:

  • Expand the wage base upon which UI benefits are calculated from $14,000 to $15,000 in 2015.
  • Incorporate an expanded rate table that makes rates more dependent on the hiring and firing record of individual companies.  Rates for 2015, 2016 and 2017 will be frozen at Schedule C on the new table.
  • Expand the current one-year window for determining the experience rating of employers to three years.
  • Prohibit self-employed “persons of influence” from laying themselves off on a seasonal basis and collecting unemployment benefits.
  • Increase the definition of season employee from 16 to 20 weeks.

The measure does not 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.

“The UI reform takes some positive steps toward improving the efficiency of the system used to pay jobless benefits. The most important change is that employers will be rewarded for the stability of their work forces and rates are locked in for the next three years.” said John Regan, Vice President of Government Affairs at AIM.

The bill would boost the minimum wage to $9 per hour on January 1, 2015, $10 per hour on January 1, 2016 and $11 per hour on January 1, 2017. That increase would provide an average pay increase of $2,573 to 491,900 Massachusetts workers who currently earn between $8 and $11 per hour.

It would also indirectly push up wages by an average of $727 for an additional 317,200 workers because of union contracts linked to the minimum wage and general upward pressure on wages. The total tab for Massachusetts employers will come to $1.5 billion.

“AIM has argued that there are sound economic reasons not to increase the minimum wage. Far from helping poor people, moving the minimum wage to $11 an hour will simply ensure that people whose skills do not justify that wage will not find jobs,” Regan said.

The Senate is expected to vote on the unemployment insurance/minimum wage compromise today. State House News Service reports that the House may take up the measure next week.

The economic development bill approved by a vote of 125 to 23 in the House includes a $15 million middle skills jobs training grant fund, $10 million for brownfields redevelopment, efforts to boost jobs in so-called Gateway Cities and a Big Data Innovation and Workforce Fund. House members declined to include the controversial ban on non-competes.

AIM has led the opposition to proposals from Governor Deval Patrick and a group of venture capitalists to ban the enforcement of non-competes in Massachusetts. A recent survey conducted by the association found that every one of the hundreds of employers who answered favors preserving the options of employers and workers to use the agreements.

Topics: Minimum Wage, Unemployment insurance, Non-Compete Agreements

Unemployment Insurance Rates Frozen - Finally

Posted by John Regan on Apr 15, 2014 3:05:00 PM

Governor Deval Patrick today signed an Unemployment Insurance rate freeze for 2014, eliminating a $500 million increase on employers that took effect January 1.

StateHouse-resized-600The measure freezing UI contributions at the current Schedule E will still leave the fund used to pay benefits to unemployed people with a balance of approximately $800 million. It marks the sixth consecutive year in which the governor and Legislature have rolled back an automatic increase in employer UI taxes.

“It’s a terrific day for the Massachusetts economy,” said Richard C. Lord, President of Associated Industries of Massachusetts, which led the effort to secure a rate freeze.

“We commend Governor Patrick and the Legislature for approving the freeze before first-quarter Unemployment Insurance bills are due. It’s an action that will prime the pump for job growth and eliminate the potential of Massachusetts having the highest UI rates in the country.”

Employers now look forward to the debate over long-term structural changes to the commonwealth’s UI system. The Senate and House of Representatives have passed separate reform bills that contain a new rate table that decreases the financial burden on high-rated employers with low workforce turnover; multiple-year rate freezes; and an increase to the wage base upon which benefits are calculated.

With the rate issue resolved, employers must now engage with the UI system to settle accounts for the first quarter of 2014. The deadline for filing first quarter taxes is May 30, 2014.

According to the Massachusetts Division of Unemployment Assistance (DUA):

  • All employers must submit employment and wage detail no later than April 30.
  • The rates will be loaded the first two weeks in May.
  • During the week of May 19, the system will open back up for employers to make their quarterly contributions.
  • Contributions are due by May 30.

DUA is updating its Web site to reflect the new schedule and staff members are fully aware of the timeline in case employers have any questions. AIM will inform member employers if any element of the timeline changes.

The division indicates that it will work with individual employers seeking deferrals.

For the first and second quarters, an employer may check off the deferral option and defer up to one third of the contributions due to the following second and third quarters respectively. You may file and pay online by logging into your account at www.mass.gov/dua.

It is your responsibility to file the report before the due date.

If you fail to file on the due date, you may be assessed a penalty. By law, you will be charged interest on all contributions paid after the due date. The interest is 12 percent per year. DUA charges interest on the contributions due starting from the due date until the payment date.

Conversely, the Voluntary Contribution option allows experience-rated employers to make additional UI contributions to reduce their UI contribution rate for the forthcoming calendar year.The Voluntary Contribution process for this year will also be a manual process.

To qualify for the Voluntary Contribution program, an employer:

  • must be eligible for experience rating;
  • must have submitted all Employment and Wage Detail Reports; and
  • must have paid all Unemployment Insurance contributions, interest, and penalties to date.

Topics: AIM General Wage Survey, Unemployment insurance

Unemployment Insurance Rates Frozen - Finally

Posted by John Regan on Apr 15, 2014 12:35:06 PM

Governor Deval Patrick today signed an Unemployment Insurance rate freeze for 2014, eliminating a $500 million increase on employers that took effect January 1.

StateHouse-resized-600The measure freezing UI contributions at the current Schedule E will still leave the fund used to pay benefits to unemployed people with a balance of approximately $800 million. It marks the sixth consecutive year in which the governor and Legislature have rolled back an automatic increase in employer UI taxes.

“It’s a terrific day for the Massachusetts economy,” said Richard C. Lord, President of Associated Industries of Massachusetts, which led the effort to secure a rate freeze.

“We commend Governor Patrick and the Legislature for approving the freeze before first-quarter Unemployment Insurance bills are due. It’s an action that will prime the pump for job growth and eliminate the potential of Massachusetts having the highest UI rates in the country.”

Employers now look forward to the debate over long-term structural changes to the commonwealth’s UI system. The Senate and House of Representatives have passed separate reform bills that contain a new rate table that decreases the financial burden on high-rated employers with low workforce turnover; multiple-year rate freezes; and an increase to the wage base upon which benefits are calculated.

With the rate issue resolved, employers must now engage with the UI system to settle accounts for the first quarter of 2014. The deadline for filing first quarter taxes is May 30, 2014.

According to the Massachusetts Division of Unemployment Assistance (DUA):

  • All employers must submit employment and wage detail no later than April 30.
  • The rates will be loaded the first two weeks in May.
  • During the week of May 19, the system will open back up for employers to make their quarterly contributions.
  • Contributions are due by May 30.

DUA is updating its Web site to reflect the new schedule and staff members are fully aware of the timeline in case employers have any questions. AIM will inform member employers if any element of the timeline changes.

The division indicates that it will work with individual employers seeking deferrals.

For the first and second quarters, an employer may check off the deferral option and defer up to one third of the contributions due to the following second and third quarters respectively. You may file and pay online by logging into your account at www.mass.gov/dua.

It is your responsibility to file the report before the due date.

If you fail to file on the due date, you may be assessed a penalty. By law, you will be charged interest on all contributions paid after the due date. The interest is 12 percent per year. DUA charges interest on the contributions due starting from the due date until the payment date.

Conversely, the Voluntary Contribution option allows experience-rated employers to make additional UI contributions to reduce their UI contribution rate for the forthcoming calendar year.The Voluntary Contribution process for this year will also be a manual process.

To qualify for the Voluntary Contribution program, an employer:

  • must be eligible for experience rating;
  • must have submitted all Employment and Wage Detail Reports; and
  • must have paid all Unemployment Insurance contributions, interest, and penalties to date.

Topics: AIM General Wage Survey, Unemployment insurance

Conference Committee OKs Unemployment Insurance Rate Freeze

Posted by John Regan on Apr 8, 2014 6:25:00 AM

A Beacon Hill conference committee last night recommended that the Massachusetts Legislature freeze Unemployment Insurance rates for 2014, a move that would spare employers from an unnecessary 33 percent tax increase that took effect January 1.

Unemployment InsuranceThe measure now moves to the full Senate and House of Representatives, both of which have already approved a freeze as part of separate pieces of legislation. Expedited passage by the two chambers would meet a priority of Associated Industries of Massachusetts (AIM) to secure a freeze before first-quarter Unemployment Insurance tax bills go out to employers.

“AIM and its 4,500 member employers commend the legislative conference committee for advancing the Unemployment Insurance rate freeze. We urge the House and Senate to pass the freeze as soon as possible and Governor Patrick to sign it,” said Richard C. Lord, President and Chief Executive Officer of AIM.

First-quarter UI payments are generally due by April 30, but the Massachusetts Department of Unemployment Assistance Advisory Committee recently postponed the deadline until May 30.

The automatic rate $500 million Unemployment Insurance tax increase facing employers came despite the fact that the fund used to pay benefits to jobless residents enjoys a healthy balance of $800 million. While House and Senate members agree on the freeze, they have disagreed about how to wrap that freeze into a broader set of reforms to the state’s costly Unemployment Insurance system.

Separate House and Senate UI reform bills share several common elements, including 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. The bills also propose multiple-year rate freezes on the new table, and an increase to the wage base upon which benefits are calculated.

Neither reform includes 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.

 

Topics: Massachusetts Legislature, Unemployment insurance, Business Costs

House OKs Unemployment Reform; Freeze Remains Priority

Posted by John Regan on Apr 3, 2014 11:14:00 AM

The Massachusetts House of Representatives last night joined the state Senate in passing legislation to freeze Unemployment Insurance rates and avert a $500 million tax increase on employers that took effect on January 1.

Unemployment InsuranceIssue closed right? Well, not so much. The two branches disagree about how to wrap that freeze into a broader set of reforms to the state’s costly UI system, so employers still find themselves staring down the barrel of a 33 percent jump in UI taxes.

Lawmakers will eventually work out their differences in a conference committee, but that process is complicated because House and Senate have passed different bills dealing with UI reform and a minimum-wage increase.

“The priority for the Legislature must be to freeze Unemployment Insurance rates for 2014 before employers pay first-quarter UI taxes. Otherwise, the economy will be saddled with an unnecessary tax increase at a time when the fund used to pay jobless benefits is financially stable,” said Richard C. Lord, President and Chief Executive Officer of Associated Industries of Massachusetts.

The House voted 123-24 last night to pass a bill that would freeze UI rates, introduce modest reforms of the Unemployment Insurance system, and raise the Massachusetts minimum wage from the current $8 per hour to $10.50 per hour over three years. The Senate passed legislation in February to increase the minimum wage to $11 per hour over three years and then link it to the rate of inflation.

The House UI reform package would:

  • Expand the wage base upon which UI benefits are calculated from $14,000 to $15,000 in 2015.
  • Incorporate an expanded rate table previously passed by the Senate that would make rates more dependent on the hiring and firing record of individual companies.  Rates for 2015, 2016 and 2017 would be frozen at Schedule C on the new table.
  • Retain the current one-year window for determining the experience rating of employers.
  • Prohibit self-employed “persons of influence” from laying themselves off on a seasonal basis and collecting unemployment benefits.

Neither the House nor the Senate bills 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. AIM opposes increases to the state minimum wage.

Lord called the House vote a “step in the right direction” toward addressing UI rates that are among the highest in the nation.

“We are gratified that both the House and Senate have passed Unemployment Insurance reform. Employers did not get everything they wanted, but we look forward to continuing the conversation with Beacon Hill lawmakers in the months ahead,” Lord said.

Need more information? Join the AIM Brown Bag issues Webinar on April 9 at Noon.

Topics: Minimum Wage, Unemployment insurance, Massachusetts House of Representatives

House Plans Debate on Unemployment Insurance, Minimum Wage

Posted by Christopher Geehern on Mar 31, 2014 6:46:00 AM

The Massachusetts House of Representatives is scheduled to debate a bill Wednesday that would reform Unemployment Insurance and increase the state minimum wage, but continued wrangling on Beacon Hill makes it uncertain when either of those matters will land on the governor’s desk.

Unemployment InsuranceEmployers, meanwhile, continue to confront an unnecessary $500 million increase in Unemployment Insurance taxes for 2014, even though both the House and Senate have separately approved UI rate freezes. Associated Industries of Massachusetts (AIM) today renewed its call for lawmakers to pass a stand-alone rate freeze that would avert a 33 percent rate increase before employers have to pay it.

“Time is running out to address a catastrophic tax increase that could dampen an already tentative economic recovery. The House and the Senate agree that UI rates should be frozen for 2014 - let’s pass that freeze and then engage in meaningful debate about broader UI reforms and the minimum wage,” said John Regan, Executive Vice President of Government Affairs for AIM.

The House bill to be debated this week will take the form of an amendment to legislation governing domestic workers. The measure would:

  • Freeze Unemployment Insurance rates for 2014.
  • Expand the wage base upon which UI benefits are calculated from $14,000 to $15,000 in 2015.
  • Incorporate an expanded rate table previously passed by the Senate that would make rates more dependent on the hiring and firing record of individual companies.  Rates for 2015, 2016 and 2017 would be frozen at Schedule C on the new table.
  • Retain the current one-year window for determining the experience rating of employers.
  • Prohibit self-employed “persons of influence” from laying themselves off on a seasonal basis and collecting unemployment benefits.
  • Increase the Massachusetts minimum wage over three years, from the current $8 per hour to $9 per hour on July 1, $10 per hour on July 1, 2015, and $10.50 per hour in July 1, 2016. The minimum wage would not be indexed to inflation, but would always be at least 40 cents per hour higher than the federal minimum.
  • Include a provision supported by AIM giving employees the option of being paid semi-monthly rather than weekly or bi-weekly.  Semi-monthly pay results in 24 pay periods per year while bi-weekly has 26 pay periods per year.

Neither the House bill, nor a 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.

Senate President Therese Murray warned last week the House decision to develop its own, combined UI/Minimum Wage bill could jeopardize its fate this session.

“That would compromise the timeframe greatly because then we would have to take up a whole new bill here which we’ve already done it twice and that could take as much as eight weeks or more during budget season so that’s why we were trying to prevent that from happening,” Murray told the State House News Service.

Topics: Minimum Wage, Unemployment insurance, Massachusetts House of Representatives

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

House OKs Stand-Alone Unemployment Insurance Rate Freeze

Posted by Christopher Geehern on Feb 13, 2014 7:24:00 AM

The Massachusetts House of Representatives approved a stand-alone Unemployment Insurance rate freeze yesterday that would avert an automatic $500 million tax increase on employers that took effect on January 1.

Unemployment InsuranceThe measure freezing rates at the current Schedule E will now go to the Senate, which last Thursday passed a similar measure as part of a sweeping restructuring of the system that pays benefits to jobless workers. The timing of the Senate debate remains uncertain.

"The House deserves tremendous credit for moving quickly to avoid a catastrophic tax increase on employers," said John Regan, Executive Vice President of Government Affairs at Associated Industries of Massachusetts.

"Employers are certainly interested in making long-term reforms to an antiquated unemployment system, but the immediate need is for Beacon Hill to enact a rate freeze before the Department of Unemployment Assistance sends out first-quarter tax bills in April."

Representative Brian Dempsey, D-Haverhill, chair of the House Ways and Means Committee, acknowledged during debate that House leaders expect to  craft a UI reform bill, but that time is becoming short to avert the 33 percent rate increase. Speaker Robert DeLeo, D-Winthrop, has said he would like to link UI reform to a measure to increase the state's $8 per hour minimum wage.

"The reason we are adopting the freeze today is really one of management because the bills have to go out and if we do not take action today it becomes a very challenging situation," Dempsey told the House.

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

The House approved the rate freeze as part of a larger $154 million spending bill.

Senate leaders said last week that their Unemployment Insurance reform bill is designed to stabilize UI tax rates for most employers and make those rates more dependent on the hiring and firing record of individual companies. 

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.

AIM was disappointed that the Senate did not reduce the maximum duration of benefit weeks from 30 to 26 or increase the time people must work before collecting benefits, but the association expects to place those issues front and center when the House takes up its reform bill.

Topics: Unemployment insurance, Massachusetts employers, 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

Governor, Speaker Affirm Support for Unemployment Insurance Reform

Posted by John Regan on Jan 29, 2014 2:19:00 PM

Massachusetts employers should be encouraged that Governor Deval Patrick and House Speaker Robert DeLeo (right) have both affirmed in the past 24 hours their support for reforming the commonwealth’s antiquated Unemployment Insurance system.

Speaker Robert DeLeoAIM strongly urges lawmakers to ensure that the reform is substantive.

“This is the year we are going to improve our Unemployment Insurance system,” DeLeo said during his annual address to the House this afternoon.

Linking unemployment reform to a push to increase the minimum wage, the speaker told House members that “any increase in the minimum wage must be paired with meaningful improvements to our unemployment insurance system.”

Speaking from the same podium during his State of the Commonwealth address Tuesday night, Governor Patrick said: “We ought to change the incentives in our UI system to encourage the hiring of the long-term unemployed, to make it easier for those on unemployment to start their own business, and to make it more straightforward for companies to comply. I submit that we can have a system that encourages hiring, not one that raises even a second thought about it.”

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 changes to the system through which benefits are paid to unemployed workers.

It is a system that has generated dizzying uncertainty for employers during the last six years as lawmakers have been forced to freeze automatic rate increases that were not needed to maintain the financial stability of the Unemployment Insurance Trust Fund. Massachusetts employers saw UI taxes jump 33 percent on January 1, which will drain an additional $500 million unless the Legislature freezes rates before billings go out for the first quarter.

AIM was pleased that Speaker DeLeo today committed to seeking a freeze.

AIM has a clear definition of substantive UI reform:

  1. Adjust the UI rate schedule to require negatively rated employers, those who habitually put employees into the UI system, to pay higher rates than more stable employers whose employees rarely use the UI system; and to require that new employers contribution rate be set at the so-called zero positive rate, more accurately reflecting the employers actual trust fund balance and avoiding "sticker shock" when receiving the actual bill after the first year of operation. 
  2. Increase the work requirement for eligibility to collect UI benefits from 30 times the weekly benefit amount to forty and requiring wages to be paid in at least two quarters, bringing Massachusetts into line with the majority of other states; (estimated annual savings:  $30 million.)
  3. Reduce the maximum duration of benefit weeks from 30 to 26 when the state's economy is performing well by adjusting the statutory trigger mechanism from 5.1 percent unemployment in each of the 10 local labor markets in the state to a straight 5.1 percent unemployment rate statewide over the preceding six months - producing savings in the UI Trust Fund of between $50 and $90 million per year. This provision would bring Massachusetts' benefits into line with all other states.

DeLeo also said the House would produce a Fiscal Year 2015 budget with no new taxes and fees.

“We’ve taken decisive action to make Massachusetts work, to signal to companies near and far that we are open for business, to strengthen our economy and support our citizens during the worst … downturn since the Great Depression,” he said.

 

Topics: Unemployment insurance, Massachusetts House of Representatives, House Speaker Robert DeLeo, Deval Patrick

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