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Conference Committee OKs Unemployment Insurance Rate Freeze

Posted on April 8, 2014

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.