Beginning January 1, 2012, the maximum weekly unemployment insurance benefit increased from $598 to $611.  The worker’s compensation benefit has gone up from $792 to $ 810 per week, and the maximum weekly benefit for disability has increased from $559 to $572. 

The taxable wage has increased to $30,300, up from $29,600 last year.  The base week earnings amount is untouched and remains at $145, and the alternative earnings amount also remains steady at $7,300.

State lawmakers approved a bill that would reduce the number of weeks claimants could collect, dependent upon the state’s unemployment rate.  Florida would be the first state to correlate the two.  Under the new bill, which Governor Rick Scott is expected to sign, beginning in 2012 the maximum time period that a claimant could collect would be twelve weeks if the unemployment rate is at 5% or below.  The number of weeks an individual could receive jobless benefits would increase by one week for every 0.5 percent the jobless rate increases above 5 percent.  It would cap at 23 weeks, down from the current 26 weeks, if the state’s unemployment rate is 10.5% or higher.

Florida’s current unemployment rate is 11.1%, the third highest in the country.  Michigan and Missouri have also recently cut their state benefits to 20 weeks, and Arkansas reduced theirs by one week. 

New Jersey just introduced a bill that would lower the tax increase on employers over a period of three years.  Instead of levying a $300 tax per employee this year, state lawmakers introduced a bill that would increase taxes by $130 this year, then increase it additionally over the next two years.  In addition, the bill would slow the rate at which the taxes are lowered, allowing the state’s UI trust fund to build a reserve.

The measure may well be the first of its kind in the United States, and the apparent need for it may point to a growing national problem.  Not only is the practice punitive in nature, it reduces the talent pool an employer can draw from and can also contribute to the state’s high unemployment rate.

Another aspect of the bill is that it allows employers to deny benefits for employee misconduct, expanding the definition of misconduct to include lateness and absenteeism. Workers would be required to complete a job-skills assessment. Lastly, workers would be required to accept job offers that are at least comparable to their benefit, once they have reached 12 weeks of unemployment.

The House bill is ready for the floor and the House resumes its session on March 8.

The State Senate has a similar bill but it does not reduce the eligibility period the way the House bill does.

This current bill is similar in design to one signed by Governor Chris Christie in New Jersey in July, 2010.  In that bill, Christie included changes to the NJ unemployment benefits for those employees who lost their jobs due to misconduct.  The new law establishes a three-tiered structure which determines whether or not benefits will be paid, and/or extend the waiting period for eligibility.

1. Simple misconduct is a violation or disregard of a company rule or policy, i.e.  insubordination, dress code violations or excessive lateness or absences without written warning.  With a termination for simple misconduct, an employee would be disqualified from collecting benefits for eight weeks.  After that period, the employee would be eligible to receive benefits if still not working.
2. Severe misconduct is the newest definition, and includes any excessive violations of company policy, such as repeated lateness or absences after written warnings, falsification of records or use of drugs or alcohol on the work premises.  If an employee is terminated for severe misconduct, they are ineligible for benefits until they work for a new employer for four weeks, earn six times their weekly benefit and are released from employment through no fault of their own.
3. Gross misconduct is defined as a criminal violation of the first, second, third or fourth degree under the New Jersey Code of Criminal Justice.  If an employee is released for gross misconduct, they are ineligible for benefits indefinitely until they are working for a new employer for eight weeks (up from four weeks), earn ten times (up from six times) their weekly benefit rate and then are separated through no fault of their own.

These are just a few of the provisions:

•  Unemployment insurance has been extended an additional thirteen (13) months, to December 31, 2011.  The current cap of 99 weeks remains in place.
• A one (1) year payroll tax deduction of 2%, from 6.2% to 4.2% will be implemented.  Generally speaking, an individual making $50,000 will save $1,000 per year.  The salary cap for the payroll tax remains at $106,800.
• Employers may reimburse employees for transit related expenses up to $230 per month.
• Employees are allowed to use up to $5,250 in employer-provided tuition assistance, pre-tax, for degree or certification education.

The new legislation is expected to cost $858 billion.

There are two key components to the job incentive portion of the bill.  First, businesses who hire a worker out of work for more than two (2) months, at a wage of up to $106,800, are “forgiven” the 6.2% Social Security (“SS”) payroll tax liability.  The maximum value would be $6,621 per employee. 

In order to be eligible, businesses must hire a “qualified” employee, who: 

1. Starts work between February 3, 2010 and January 1, 2011, although wages paid after March 18 will be eligible;
2. Must not have worked for more than forty (40) hours over the preceding sixty (60) days before the date of hire;
3. Must not replace a current employee unless that employee resigned or was terminated for cause;
4. Must not be related to the owner of the business or have more than a 50% ownership interest; and
5. May have been previously laid off employees.
6. May be full- or part-time employees.

The payroll tax forgiveness does not apply to wages paid in the first quarter of 2010, but wages paid after the bill was signed (March 19) would be credited against your OASDI liability for the second quarter.

As an additional incentive, an employer who keeps an employee for 52 continuous weeks would be entitled to a tax credit of up to $1,000.  This credit would be filed by you on your company’s corporate tax return. 

More information about the HIRE Act, including the IRS Form W-11, can be found here.

The bill will:

1)      Extend unemployment benefits until December 31, 2010, which would offer many workers up to a total of 99 weeks of unemployment insurance.

2)      Extend the COBRA subsidy to those workers involuntarily terminated from March 1 through March 31, 2010.

3)      Send aid to states with poor or no tax revenue in an attempt to prevent layoffs of public service employees.

4)      Extend a $250 tax deduction for teachers who buy their own classroom supplies.

5)      Offer tax credits for installing energy-efficient windows, doors and skylights that meet the 2010 Energy Star standards.

All of the Democratic and six Republican Senators voted in favor of the bill.  Those opposed to the bill fear it will add to the $12.5 trillion deficit, while supporters contend that unemployment benefits act as a short-term stimulus, since those strapped for cash tend to spend it quickly, thereby boosting demand in the economy.

For more information, see

“Senate passes jobless aid, business tax breaks,” (http://www.msnbc.msn.com/id/35776449/ns/business-economy_at_a_crossroads/)

“Senate Approves $138 Billion Bill Extending Unemployment Aid,” (http://www.bloomberg.com/apps/news?pid=20601087&sid=aj54ARnTfC4k&pos=8)

 Roughly 400,000 Americans were scheduled to lose their unemployment benefits as of the end of February.  The national unemployment rate dropped a little in January, to 9.7% from 10% in December.  February’s unemployment numbers are due out on Friday.

The legislation, the Temporary Extension Act of 2010 (H. R. 4691), also extends the deadline for qualifying for subsidies for COBRA continuation coverage, allowing workers who are involuntarily terminated in March to qualify for the program.  Workers would have lost the opportunity to qualify for the subsidy under The American Recovery and Reinvestment Act of 2009 (ARRA), as amended by the Department of Defense Appropriations Act of 2010, as of February 28, 2010.  Now, workers who are involuntary terminated between September 1, 2008 and March 31, 2010 are eligible for up to 15 months of COBRA subsidies.

Click here for the text of the bill.

The plan introduces several key components:

The rate increase would be capped at 17%, or $130 per employee.

1. New Jersey currently has one of the highest benefit levels in the country, at $600 per week.  The Governor’s plan calls for a reduction in that amount to $550, which would save the state $295MM.
2. New Jersey would adopt a “hold-back week” similar to other states, delaying the receipt of benefits until the 8^th day after the first day of unemployment.  If the claimant qualifies for the full 26 weeks, then (s)he would receive benefits for that period.  This change would save $67MM.
3. New Jersey would toughen the eligibility standard for employees discharged for misconduct.  The Governor’s plan requires employees who fall into this category to obtain employment for a specified period of time before once again qualifying for unemployment benefits.  This change would save the state $189 MM.
4. Again following the lead of several other states, New Jersey would adopt the provision that it would only extend benefits if 100% funded with federal money. This would save $1.6 billion over the next two years.

Also, the Governor supports a constitutional amendment preventing any future raiding of the fund to bankroll other state initiatives and/or projects, and continue to rely on federal funding of extended unemployment benefits and avoid devastating payroll tax increases. 

The Christie Plan to Protect New Jersey’s Small Businesses can be found at http://www.njbusinessmatters.com/files/Gov_Christie_UI_Fund_Solutions.pdf.