Wednesday, March 3, 2010

UI bill heads to Governor for signature

A bill that will help businesses with anticipated soaring unemployment insurance (UI) rates has cleared the Hawaii State Senate today and is now headed to the Governor to be signed into law. HB2169, HD2, introduced by Rep. Karl Rhoads (pictured at left), will provide significant tax relief for employers while maintaining unemployment benefits for those who have been laid off through no fault of their own.

“I am very pleased that the Senate approved my bill, HB 2169, lowering unemployment insurance tax rates,” said Rep. Rhoads, Chair of the House Labor and Public Employment Committee. “HB 2169 is now on its way to the Governor, and I hope she will sign it by March 12. Her prompt signature would allow the Department of Labor and Industrial Relations to include the new lower rates in employers’ first quarter statements.”

The bill sets new lower rates for the next two years. Without the legislation, unemployment rates are scheduled to increase dramatically due to the struggling economy and high state unemployment. As a result, on average, an employer would now pay, per employee, $630 instead of $1070 in the first year, and $970 instead of $1520 in the second year.

Specifically, the bill does 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.

· Mandates recalculation of the adequate reserve fund beginning in 2012.

“Lowering unemployment insurance rates was the highest priority of the Chamber of Commerce of Hawaii for this Legislative session,” added Rep. Rhoads. “Both the House and the Senate fast-tracked this important legislation. HB 2169 will defer $241 million in UI taxes over the next two years. This is an important piece of good news to the business community during these difficult economic times.”