Unemployment Insurance News – July 15, 2022

UNEMPLOYMENT CLAIMS ON THE RISE

• The US Department of Labor reports the number of initial claims filed rose to 244,000 for the week ending July 9, 2022, the highest number of initial claims since November of 2021. The surge in new claims is reported to be mainly stemming from seasonal layoffs impacting the auto industry as well as layoffs in the housing, manufacturing, tech, and energy industries. We will continue to monitor the weekly trends for continued increases in initial claims.

PHISHING ALERT

• The State of Washington recently alerted claimants of a new scam being sent via email. Claimants may receive an email alerting them that they may be eligible for a “bonus” round of unemployment benefits.  According to WA ESD if an email or something similar is received, know that it’s a scam. Don’t click on any links in the email! The text of the email says:

“You may be eligible for the new U.S. DEPARTMENT OF LABOR COVID-19 SUPPLEMENT BONUS. $5,700 could be direct deposited into your account. Click the link below to apply.” 

• While this notice came from Washington, they are also reporting that UI customer across the country have received similar phishing emails.  Congress has not authorized any new pandemic related benefits and claimants should be warned that this is a phishing scam attempting to get them to reveal personal information that can be used for fraudulent purposes.

POTENTIAL FUTA CREDIT REDUCTIONS

• During the pandemic, many states borrowed money through Title XII loans to keep their trust funds afloat. Most states have been able to replenish their trust funds and pay off the outstanding Title XII loans as they continue to recover from the pandemic or by using funds made available through the American Rescue Plan Act (ARPA).  As of July 11, 8 states remain with outstanding Title XII loans and could possibly see a reduction in their FUTA Credit for 2022.  For employers with employment in California, Colorado, Connecticut, Illinois, Massachusetts, New Jersey, New York, and the Virgin Islands, additional FUTA taxes may be due.

The final FUTA Credit reduction, if any, for a given year is not determined until November 10 of that year; however, a potential credit reduction of 0.3% would apply in 2022 creating a year over year FUTA tax increase of $21 per employee earning at least $7,000 for the year.

• Federal Unemployment Insurance Tax Act (FUTA) Sections 3302(c)(2) and 3302(d)(3), provide that employers in states that have an outstanding balance of advances under Title XII of the Social Security Act on January 1 of two or more consecutive years are subject to a reduction in credits otherwise available against the FUTA tax, if all advances are not repaid before November 10 of the taxable year. These credit reductions are made from the regular FUTA Credit of 5.4%. So, while employers in states without a further credit reduction will have a FUTA tax rate of 0.6% (on the first $7,000 of wages paid) for the year, employers in states with a reduced credit due to an outstanding balance of advances will incur a FUTA tax rate of 0.6% plus the FUTA credit reduction.

CONNECTICUT – New System Issues

• Last week, Connecticut rolled out their new unemployment system ReEmployCT. We have not seen any issues with the employer side of the claim process with CT but there are reports that claimants who need assistance are running into long-wait times when calling in.  Reports from claimants’ state that wait times for a call back can range from 100-174 hours.  CT advises claimants to use the weekly certification if they have an existing claim rather than opening a new claim, only book one appointment instead of trying to book multiple appointments, and to schedule a callback online rather than calling in over the phone. We will continue to monitor the new ReEmployCT system for any client facing impacts.

LOUISIANA – 2023 Taxable Wage Base/Maximum Weekly Benefit Amounts to Remain the Same

• Governor John Bel Edwards recently signed a bill applying “Procedure 2” that would hold the taxable wage base in Louisiana at $7,700. By applying this procedure, this represents a tax savings for LA employers as the taxable wage base should be set at $8,500 based on the actual trust fund balance.  The bill also holds the maximum weekly benefit amount at $275 (should be reduced to $249 based on the trust fund balance as well).