Employers Get Some Good Unemployment Compensation News

After months of reporting on the state’s stagnant job growth, Connecticut’s Labor Department (DOL) recently was able to switch gears by releasing two items of good news for employers.
Lower Interest Rate
The DOL says the federal government has reduced the interest rate from 2.9430% to 2.5765% on funds borrowed by the state to shore up the Unemployment Compensation Trust Fund.
Connecticut is one of 20 states that had to borrow significantly from the federal government as the recession, and the period of prolonged high unemployment that followed, decimated the trust fund.
Until the state pays back the money, employers are being hit with special assessments and a continuously increasing federal unemployment tax rate (FUTA).
With the now-lowered interest rate, however, this year’s special assessment will be about 20% less than in previous years. Last July, the state mailed special assessments at $19 per full time employee. This July, the special assessments will be $15 per full-time employee.
Employers will appreciate the savings in total unemployment compensation costs over the previous year, but the true benefit will come when the state’s debt is paid in full and no special assessment is needed—something DOL concedes may not happen until 2016.
Fighting Fraud
Another bit of good news is that the Unemployment Compensation Fraud Unit, created as a result of a partnership between the DOL’s and the Chief State’s Attorney’s office, is starting to achieve results.
According to recent press releases from the Division of Criminal Justice, the fraud unit has so far charged 11 individuals with larceny and/or unemployment compensation fraud.  They are accused of fraudulently obtaining benefits in a combined amount of more than $160,000.
The increase in criminal investigations goes hand in hand with a bill passed this past legislative session (SB 909, PA 13-66) that raises the financial penalty on individuals who fraudulently obtain unemployment benefits.
Employers must be aware, however, that under the new law they could be saddled with penalties if their failure to respond to inquiries from DOL contributes to the improper benefit payments.
In addition to financial penalties, the criminal penalty for individuals charged with larceny can be up to 20 years in prison, and the penalty for unemployment compensation fraud can be up to five years in prison.
DOL also has warned that while claimants have been the primary target for their investigations, employers that misclassify their employees as independent contractors will also be the subject of future investigations.
DOL is encouraging employers to help in the effort to combat unemployment compensation fraud. They should report the individuals they hire or rehire to the Labor Department as soon as possible.
In addition, employers aware of any individual fraudulently obtaining unemployment compensation benefits should report that information through the department’s website or by calling the tip hotline at 1.800.894.3490.
For more information, contact CBIA’s Eric Gjede at 860.244.1931 or eric.gjede@cbia.com.