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House OKs Unemployment Reform; Freeze Remains Priority

Posted on April 3, 2014

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.