Senate eyes changes to unemployment insurance program to provide some relief for employers

By | January 17, 2011 | Comments

The Senate Labor & Commerce Committee is considering a bill and a draft to modify the unemployment insurance program to provide some relief for employers.

Background: Employers pay two types of unemployment insurance — experience and social. The experience portion is based on previous layoffs at the business. There are 40 different experience classes. The social portion is assigned to everyone and has varied from .95 to 1.33 percent. The total tax rate — experience plus social cost — is capped at 6 percent, and employers in the top five classes will hit that level this year.

This bill would cap the rate at 1.22 percent, providing businesses some relief. The 6 percent rate cap would still stand.

Peter Bogdanoff with Gov. Chris Gregoire’s office, said both this bill and the draft are at Gov. Chris Gregoire’s request. “Taken together, these two governor request bills provide a jump start for the economy,” he said. Under this bill, about 90 percent would pay lower rates under this plan than they would otherwise — and half would pay lower rates than they paid last year.

The catch? In order for that to work — and for employers to save about $300  million — the Legislature needs to pass the bill by Feb. 8.

Now for the public hearing. If the bill doesn’t go into effect, employers will face a 30 percent rate hike, on average, said Nancy Hiteshue with Washington Roundtable.

Judy Coovert with Printcom Inc. said she’s in rate class 29, “so the monetary benefit to us will be about $370 is all” in the first quarter, she said. But, she appreciates that Gov. Chris Gregoire came up with the proposal and she said the savings for those in lower experience brackets will be meaningful. “We need to do everything possible to avoid adding new costs to this system.”

Lisa Harris with True Blue, a staffing agency, said she also thanks the governor for trying to help businesses cope with rising costs. Nevertheless, she said, Washington businesses pay among the highest tax rates for unemployment. “With the proposed tax change, our 2011 increase will be $394,000, but that still is 7.9 full-time jobs,” for her company, she said.

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