| Unemployment comp costs could rise in 2009
Trust Fund already paying out more than coming in
(Nov. 12, 2008) Employers are expected to face higher unemployment compensation costs in 2009 as the recession digs deeper into Connecticut's economy.
Although the full effects of the downturn are yet to come, the state's Unemployment Compensation Trust Fund is already paying out more in benefits this year than it is collecting, according to the state Department of Labor (DOL).
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This year, the additional unemployment compensation tax that employers are paying to keep the trust fund in the black is 0.9%. Next year, as economic troubles continue, the solvency tax rate likely will jump — possibly to as high as 1.4%. The increase will be reflected in employers' March statements from the DOL and are payable on April 1, 2009.
Connecticut employers are the sole source of funding for the Trust Fund and the benefits employees receive from it.
The tax most Connecticut employers pay for unemployment compensation is based on claims experience— the history of their former employees' actual claims. Once a rate is calculated from claims experience, it is multiplied by each employee's first $15,000 of earnings to determine the tax owed. The additional fund solvency tax is imposed, however, when the Trust Fund has insufficient reserves to cover expected payouts.
Each year, the DOL sets a solvency tax rate based on what's needed to maintain adequate reserves to handle unemployment benefits during the next downturn. By law, the annual goal is 0.8% of total wages paid to workers by contributing employers during the preceding year ending June 30. The fund solvency tax rate can range from zero to 1.4%.
For more information, contact CBIA's Kia Murrell at 860-244-1931 or kia.murrell@cbia.com.
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