Monthly Archives

August 2018

Texas: DUA Update from The TWC

Recent severe storms and flooding in the state of Texas (June 19th – July 13th of this year) resulted the declaration of a major disaster under (FEMA 4377-DR) on July 6th. Over 3,470 applications for unemployment insurance benefits have been approved for those having lost jobs or the ability to work due to the storms. Over $22,000,000 has been approved to assist those in need.

It is important to note an update that Jim Wells County has been added to the list for Disaster Unemployment Assistance eligibility in Texas.

The application deadline for this newly added county is September 4th. The original application date of August 10th applies to counties Hidalgo and Cameron.

Applicants can call 1-800-939-6631 (M-F; 8-5) or apply online anytime.

All required documentation (social security number, a copy of the most recent federal income tax form, check stubs, and/or documentation to support that you were working or self-employed when the disaster occurred) must be submitted within 21 days from when the DUA application is filed.

Mail documentation to:

Texas Workforce Commission

UI Support Services Department

ATTN: DUA

101 E. 15th Street, N. Lamar

Austin, TX, 78778-0001

Alternatively, you may fax documents to 512-936-3250.

Unemployment Weekly Claims Report for W/E JULY 28, 2018

The Unemployment  Insurance  Weekly  Claims  report  for  the  week  ending  July  28, 2018 has been released by the Department of Labor.

  • Seasonally adjusted initial claims: 218,000
  • 4 week moving average: 214,500
  • Seasonally adjusted insured unemployment rate: 1.2%
  • Seasonally adjusted insured unemployment number: 1,724,000
  • 4-week moving average: 1,741,750
  • Number of unadjusted claims: 179,538
  • Unadjusted insured unemployment rate: 1.2%
  • Unadjusted number claiming UI benefits: 1,708,718

The full news release report can be downloaded here.

Maine: Vetoed UI Bills

Two pieces of legislation regarding unemployment insurance benefits have been proposed in Maine with less than approving responses from their governor. The exemption under L.D. 700, “An Act to Give Flexibility to Employees and Employers for Temporary Layoffs”, is currently available in several states under specific circumstances. Legislators created this bill with the intent of protecting employers and employees alike in situations where an employee’s layoff from a job is temporary, with their return to the same position at some point that year. The legislation loosens the requirements for filing job search histories in this particular situation. A timeline of six weeks was set as appropriate for these seasonal-type of workers.

Governor Paul LePage has vetoed the bill, calling it “akin to allowing wage collusion among employers to keep wages low.” He continued to express his disdain for a bill that he claims protects employees from having to search for a job and allowing them to settle and be entitled to benefits.

Rep. Ryan Fecteau argues the legislation would be advantageous to both Maine employers and employees in situations of temporary business slowdowns. For an employer needing an available workforce when business picks back up, avoiding the need to seek out and retrain a new staff saves time and money, growing the local economy.

The second piece of legislation (L.D. 1770) proposed was “An Act to Revise Laws Regarding Unemployment That Were Amended of Affected by Recently Enacted Legislation.” The bill included a handful of amendments such as allowing claimants other filing methods for work searches, filling vacant DOL positions, and the posting of vacant positions. An additional portion of the bill dealt with the way in which employers pay into the system. The bill demands proper attention towards the ReEmployME filing concerns.

ReEmployME, Maine’s new unemployment insurance filing system has had a less than smooth rollout. Many claimants have reported being unable to receive benefits for weeks or months at a time, due to being locked out of the online system. The ordeal has turned controversial with the labor department denying problems, as well as reports of alleged illegal acts such as claimant complaints going missing.

LePage vetoed this bill as well, calling it an “ignorant intervention” that would result in “reduced funding to the unemployment system”. The governor argues the forceful nature of filling positions regardless of claim volume will lead to poor efficiency measures that will harm Maine for having excessively high costs per claim, decreasing funding.

New York: UI Benefits for Uber Drivers

Ride-sharing company Uber lost its legal battle last year when the New York Department of Labor ruled all drivers to now be defined as “employees” as opposed to “contract workers”.

The company just got dealt another blow with the recent ruling by the Unemployment Insurance Appeal Board, stating that New York Uber employees can now file for unemployment benefits.

New York has followed California’s lead on this decision, while many states like Florida still define Uber drivers as contract-workers by law, therefore not being eligible for UI benefits.

Many feel this could be a slippery slope when it comes to setting a precedent in the gray area of the gig-based workforce. One might also question the potential eligibility of owner-operator truck drivers, for instance, as well as segue into a discussion of the rights to additional benefits such as raises, 401(k)’s and health insurance.

Pre-Acquisition Planning for State Unemployment Taxes

While state unemployment insurance (”SUI”) taxes rarely drive a company’s decision relating to the structure of a merger, acquisition, internal workforce reorganization/restructuring, or divestiture (“M&A”) transaction, pre‐acquisition planning can help shape the timing and final organizational structure that can result in significant tax cost savings.

An acquiring employer has the responsibility, perhaps obligation, to request and obtain sufficient data from a selling employer to assess material concerns, mitigate SUI tax rate risk, and ease the payroll integration process once the transaction has closed.

Perform Due Diligence!

Due diligence is the investigation and discovery of opportunities, risks, and synergies associated with a transaction. From a SUI tax perspective, due diligence efforts should be strategically focused on areas that can have a material financial impact on an acquiring employer, such as:

  • States with significant taxable payrolls
  • SUI tax accounts with very high or very low SUI tax rates
  • Assigned penalty tax rates and the reason for such rates
  • Significant reductions in workforce
  • Debits and/or credits on accounts and the reason for such adjustments
  • Unreported historical M&A transactions
  • Improper payroll reporting practices (e.g., reporting to incorrect state or under an incorrect legal entity)

Design a Plan to Minimize Risk…

Conducting a SUI tax rate impact analysis allows the acquiring employer to quantify the financial impact a transfer of experience (i.e., tax rate) might have on future SUI tax rates and related unemployment tax costs in the current and future years. The analysis enables the acquiring employer to assess:

  • Available transfer of unemployment rating experience options (i.e., required, prohibited, or optional)
  • Revisions to tax rates and when those revisions will become effective
  • How revised rates will impact SUI tax costs
  • Ability to change the effective date of the acquisition (e.g., 01/01 vs. 12/31) to obtain the best financial results
  • Impact on existing and future statutory elections (e.g., voluntary contributions and joint accounts)

…and Maximize Tax Cost Savings

The language used in an acquisition agreement can have material financial implications to an acquiring employer. Such agreement language may influence:

  • An acquiring employer’s ability to access a selling employer’s pre‐acquisition payroll tax records. By using the wages paid by the selling employer to determine when the acquired employees attain the annual taxable wage bases (for FICA, FUTA, and SUI), the acquiring employer can realize meaningful savings by not duplicating employment taxes.
  • An acquiring employer’s ability to obtain a better SUI tax rate. By having the selling employer agree, pre‐acquisition, to any requests by the acquiring employer to transfer SUI rating experience, the acquiring employer can confidently make assumptions as to financial outcomes.
  • An acquiring employer becoming responsible for the payment of undisclosed, contingent, or delinquent SUI tax liabilities of the selling employer.

Thomas & Company assists employers during the pre‐acquisition planning phase by reviewing and assessing data for material unemployment tax risks and potential opportunities.

To speak with one of our UI Tax Analysts related to an upcoming M&A transaction or internal workforce restructuring, please contact Josh Kendall at (615) 620‐1821 or via e‐mail.