House passes Unemployment Insurance bill to help business with soaring rates

The state House of Representatives today passed on third reading a bill that would set new employer contribution rates for unemployment insurance. Unless legislation is passed, the rates will soar in the coming year due to the poor economy and high unemployment negatively impacting Hawaii’s businesses.

“Because of the recession, unemployment insurance rates will rise precipitously if no legislative action is taken,” said Rep. Karl Rhoads, Chair of the House Committee on Labor & Public Employment. “HB 2169 will provide significant tax relief for businesses during this tough economic time while maintaining unemployment benefits for those who have been laid off through no fault of their own. Unemployment benefits provide working families with the financial resources to keep food on the table and pay the mortgage or rent.”

HB2169, HD2 proposes the following:

· Sets, for calendar years 2010 and 2011, the wage base at 90% of the average annual wage.

· Sets, for calendar year 2010, the employer contribution rate at schedule D and for calendar year 2011, the employer contribution rate at schedule F.

· Retains the maximum weekly benefit rate at 75% of the average weekly wage until December 31, 2011.

· Returns the maximum weekly benefit rate to 70% of the average weekly wage on January 1, 2012.

· Authorizes special assessments upon employers to pay the principal and interest costs on loans received from the U.S. Secretary of Labor provided that the director of Labor and Industrial Relations develops a fair and equitable manner in which these payments are made.

· Establishes for recalculation of the adequate reserve fund beginning in 2011.

The House and Senate agreed earlier this session to fast-track unemployment insurance legislation with the goal of passing a new employer contribution rate structure to help small businesses as soon as possible.

HB2169, HD2 now crosses over to the state Senate for consideration. If the Senate makes amendments to the bill, the House and Senate will conference to work out differences in the two versions.