State Unemployment Reforms Take Effect Jan. 1

Historic reforms to the state’s unemployment system approved by the Connecticut General Assembly in 2021 take effect Jan. 1, 2024.

Those reforms were designed to achieve long term solvency for the state’s troubled unemployment fund, which was further weakened by historic pandemic-related unemployment claims in 2020.

The wide-ranging reform package was the product of negotiations between the business community, organized labor, the Lamont administration, and a bipartisan group of lawmakers. 

Many Connecticut businesses are receiving notification from the state Department of Labor about the impact on employers.

Taxable Wage Base

Effective Jan. 1, 2024, the taxable wage base that is a component of an employer’s unemployment taxes will increase from the first $15,000 per employee to the first $25,000.

In an attempt to offset a some of that significant increase, the state will reduce the charged rate by predetermined factors through 2027.

The minimum and maximum experience tax rates will increase to 0.1% and 10% respectively and the maximum fund solvency tax rate will be 1%, down from the current 1.4%.

The 2024 tax rate will be based on the 2022 and 2023 benefit charge and TWB totals.

The maximum fund solvency tax rate is further reduced to 0.5% during years in which an economic recession has been declared.

The changes push more of the responsibility for funding the unemployment fund to employers that use the system most—while still being partially subsidized in some cases—with tax savings for 73% of employers.

Eligibility, Benefit Changes

The 2021 reforms also overhauled eligibility requirements and benefits:

• Benefits paid to a claimant through the state’s voluntary Shared Work program during periods of high unemployment shall not be charged to experience rated base period employers.
• A claimant’s receipt of severance pay will now result in disqualification from receiving UI benefits for the period of time covered by the payment. 
• A claimant’s receipt of accrued vacation pay at the time of dismissal will not disqualify the claimant from receiving UI benefits, if otherwise eligible. However, vacation pay issued to a claimant during a shutdown period will result in a disqualification or reduction in the UI benefits. 
• The minimum weekly UI benefit payment will increase from $15 to $40 and will be subsequently indexed annually due to inflation. However, the minimum benefit will revert to $15 when the federal government provides a fully federally funded supplement to the individual’s weekly benefit amount.
• The minimum base period earnings requirement increases from $600 to $1,600 and will be subsequently indexed annually to inflation.
• However, the minimum base period earnings requirement will revert to $600 when the federal government provides a fully federally funded supplement to the individual’s weekly benefit amount.
• Each day of absence without either good cause or notice to the employer constitutes a “separate instance” of willful misconduct.
• The maximum UI benefit rate will be frozen during the four years from October 2024 through October 2028

Some of these changes may significantly increase costs for those Connecticut employers who fail to integrate immediate changes to how they handle unemployment compensation issues.

With a single claim costing as much as $18,148, it is more imperative than ever for employers to understand where these changes to the UI system will affect current operating procedures.

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About the author: Paul Scott is a vice president with Unemployment Tax Management Corporation, a third-party unemployment administrator and consultancy.