Monthly Archives

March 2021

Unemployment Weekly Claims Report for the Week-Ending March 20, 2021

The Unemployment Insurance Weekly Claims report for the week ending March 20, 2021 has been released by the Department of Labor.

  • Seasonally adjusted initial claims: 684,000
  • 4 week moving average: 736,000
  • Seasonally adjusted insured unemployment rate: 2.7%
  • Seasonally adjusted insured unemployment number: 3,870,000
  • 4-week moving average: 4,120,750
  • Number of unadjusted claims: 656,789
  • Unadjusted insured unemployment rate: 3.0%
  • Unadjusted number claiming UI benefits: 4,217,259

The full news release report can be downloaded here.

Unemployment Weekly Claims Report for the Week-Ending March 13, 2021

The Unemployment Insurance Weekly Claims report for the week ending March 13, 2021 has been released by the Department of Labor.

  • Seasonally adjusted initial claims: 770,000
  • 4 week moving average: 746,250
  • Seasonally adjusted insured unemployment rate: 3.0%
  • Seasonally adjusted insured unemployment number: 4,124,000
  • 4-week moving average: 4,255,500
  • Number of unadjusted claims: 746,496
  • Unadjusted insured unemployment rate: 3.2%
  • Unadjusted number claiming UI benefits: 4,486,389

The full news release report can be downloaded here.

Unemployment Weekly Claims Report for the Week-Ending March 6, 2021

The Unemployment Insurance Weekly Claims report for the week ending March 6, 2021 has been released by the Department of Labor.

  • Seasonally adjusted initial claims: 712,000
  • 4 week moving average: 759,000
  • Seasonally adjusted insured unemployment rate: 2.9%
  • Seasonally adjusted insured unemployment number: 4,144,000
  • 4-week moving average: 4,355,000
  • Number of unadjusted claims: 709,458
  • Unadjusted insured unemployment rate: 3.2%
  • Unadjusted number claiming UI benefits: 4,584,706

The full news release report can be downloaded here.

New York Unemployment Tax Rates Set to Rise in 2021

The New York Department of Labor announced that employers should expect unemployment tax rates to be higher in 2021 than in 2020.

Effective January 1, 2021, unemployment tax rates will range from 2.10% to 9.90% for experience-rated employers. Rates includes basic tax rates ranging from 1.50% to 8.90%, a subsidiary tax with rates ranging from 0.525% to 0.925%, and a reemployment service fund contribution rate of 0.075%. In comparison, tax rates in 2020 ranged from 0.60% to 7.90% for experience-rated employers.

The total tax rate for new employers is 4.10% for 2021, up from 3.20% in 2020.

Tax rates are determined with the schedule in effect when the size-of-fund index is less than zero.

New York’s unemployment taxable wage base is $11,800 for 2021, up from $11,600 in 2020.

As always, if there are any questions please do not hesitate to contact us or visit our website at www.thomas-and-company.com.

Budgeting for FUTA (Federal Unemployment Tax) for 2021 and Beyond

The federal unemployment tax rate for employers has become a moving target, making budgeting for this expense more difficult. Your FUTA tax payments for 2021 are not a good predictor of your 2022 liability, which will be higher for most multi-state companies.

The problem is that federal loans to the state UI trust funds can cause the net FUTA tax rate to increase for employers in the borrowing states.  The increases are in annual increments of 0.30% (on a $7,000 taxable wage base). Such an increase is referred to as a “credit reduction” because the 5.40% credit for state UI taxes paid is reduced.

The “normal” net FUTA tax rate of 0.60% (0.80% prior to July 1, 2011) is arrived at by subtracting the 5.40% credit for state UI taxes paid from the gross FUTA tax rate of 6.00%.  Given enough time, the credit reductions could theoretically cause an employer’s net FUTA tax rate to increase from 0.60% all the way to 6.00% as the credit is gradually reduced to zero.  The tax revenue generated by the credit reductions is credited to the state’s UI trust fund and reduces the state’s loan balance.

A credit reduction can be removed for a given calendar year if a state repays its outstanding long-term loan by November 10 of that calendar year.  A credit reduction can also be avoided for a calendar year (as in South Carolina in 2011) if a state takes certain actions to restore the solvency of its UI trust fund.  Further, a credit reduction can be capped (at no less than 0.60%) if certain conditions are met.

As of March 5, 2021, nineteen state unemployment insurance trust funds (plus the Virgin Islands) had outstanding federal loans that remain unpaid under Title XII of the Social Security Act. The total amount outstanding is $51.22 billion. See the link to the US Treasury website at Government – Title XII Advance Activities Schedule (treasurydirect.gov).

Employers in the following states and jurisdictions are at risk of increasing FUTA taxes as early as 2022:

California Illinois Minnesota Ohio
Colorado Kentucky Nevada Pennsylvania
Connecticut Louisiana New Jersey Texas
Georgia Maryland New Mexico Virgin Islands*
Hawaii Massachusetts New York West Virginia

*The Virgin Islands have been subject to FUTA credit reductions for several years now

Because these states had an outstanding balance as of January 1, 2021 employers with employment in the states may be subject to an increase in Federal Unemployment Tax for 2022 if a loan amount remains outstanding as of January 1, 2022 and is not repaid in full by November 10, 2022.

Interest on Title XII loans was waived through December of 2020 under temporary law pursuant to the Families First Coronavirus Response Act of 2020 and the waiver was extended through March 14, 2021 by the Consolidated Appropriations Act of 2021.  Unless there is further federal legislation extending the waiver, states will be obligated to pay the interest from sources other than regular employer UI contributions.  States should budget for payment of this interest from other sources.

The budgeting problem is exacerbated by the fact that state UI agencies have until November 10 to repay their long-term loan and avoid a credit reduction for the calendar year in which the loan balance is repaid.  No official notification of credit reductions is provided until after November 10.  By that time employers have already submitted three quarterly FUTA deposits. Any shortfall must be paid with the final deposit for the calendar year (due January 31 of the succeeding year).

As we progress through 2021, the best budgeting tool available is located at https://oui.doleta.gov/unemploy/futa_credit.asp.  The chart available is updated regularly but you should bear in mind that one or more of the nineteen at-risk states (plus the Virgin Islands) may repay their loan or qualify for a credit reduction avoidance.

We will continuously monitor this situation throughout the year and provide regular updates as they become available.  As always, if there are any questions please do not hesitate to contact us or visit our website at www.thomas-and-company.com.

 

Hawaii Revises 2021 Unemployment Tax Rates

In December 2020, we reported that employer tax rates were set to increase in Hawaii for 2021.  However, due to a bill signed on Mach 2, 2021 by Governor David Ige, Hawaii’s employers will not see as steep an increase as originally reported.

Under the measure (H.B. 1278), unemployment tax rates are to be determined with Schedule D and are to range from 0.20% to 5.80%.  The provision is retroactively effective to January 1, 2021.

Schedule D also is to be in effect for 2022, regardless of the solvency of the state unemployment trust fund.

Tax costs will still be higher in 2021 than in 2020 because rates for 2020 were determined with Schedule C, which generally has lower rates than Schedule D.  However, tax rates for 2021 initially were to be determined with Schedule H, the state’s highest unemployment tax rate schedule, for which rates range from 2.40% to 6.60%.

Additionally, for 2021 and 2022, unemployment benefit claims related to COVID-19 are to be excluded from the calculation of employers’ unemployment tax rates, which will also contribute to lower rates overall.

As always, if there are any questions please do not hesitate to contact us or visit our website at www.thomas-and-company.com.

Texas Delays 2021 Unemployment Tax Rate Calculations

As the Texas Workforce Commission, Texas Legislature, and Governor of Texas explore opportunities to keep 2021 unemployment tax rates as low as possible for Texas employers, the issuance of the 2021 unemployment tax rate notices has been delayed to July.

Tax obligations are not to be suspended and employers will be notified of unemployment tax payment options in effect until rates for 2021 are finalized in the next few weeks. Below is the reporting and payment schedule set for 2021:

 

 

 

One other important change for 2021 is that voluntary contributions will not be in effect for 2021. Governor Abbott has suspended Section 204.048 of the Texas Labor Code, which set deadlines for a small subset of employers who make voluntary contributions into the UI tax system. The Commissioners in turn aligned TWC Policy with that decision.

Texas generally calculates an employer’s unemployment tax rate in effect for a calendar year based on benefit claims and payroll data as of September 30th of the preceding year.

As always, if there are any questions please do not hesitate to contact us or visit our website at www.thomas-and-company.com.