MassachusettsUnemployment InsuranceA Federal-State ProgramEdward MalmborgDirector Division of Unemployment Assistance

Federal – State Unemployment Insurance Program The UI system was established in 1935 as

a joint Federal – State Program Purpose – To pay benefits for periods of

involuntary unemployment, to stabilize employment, and to provide public employment offices to assist UI claimants in finding jobs.

Federal Unemployment Tax Act (FUTA) Established a federal payroll tax on

employers. Primarily a tax act, includes coverage, and

definitions of wages, employers, employment.

Also defined unemployment “compensation” & implemented the basic philosophy of the program.

FUTA Payroll Tax

Implemented to defray cost of administration of UI program.

Also provides federal funding of extended benefits, and loans to states with insolvent UI trust funds.

Provides for a 6.2% tax rate on a per worker wage base of $7,000

Provides credits of a maximum of 5.4% if state law conforms with federal standards, the employer certified compliant with UI filings and payment of contributions to State Trust Fund.

Massachusetts UI - Benefits All claims based on services performed in a base period

(BP), Mass primary BP last four completed calendar quarters, all other states BP is first four of last five completed quarters.

Mass and 14 other states also have an alternate BP, optionally used if it will raise total benefits by 10%. Alternate BP = weeks since end of last quarter plus previous 3 quarters.

Earnings requirement minimum of $3500 in BP and 30 times WBA.

Weekly benefit amount (WBA) equals ½ of calculated average weekly wage. AWW = amount earned in highest 2 quarters/26 weeks. Current maximum $628.

Dependency allowance adds $25 per dependent child under 18, or 24 if a full time student.

Massachusetts Benefits (cont) Maximum total benefits = lesser of 36% of BP earnings

or 30 times WBA – so maximum duration = 30 weeks. Except during a period of federally funded extended

benefits = 26 weeks. Massachusetts provides for a person attending approved

training an additional 18 weeks of benefits, if they applied for training approval in the first 15 weeks.

Disqualification: Discharge for deliberate misconduct or company rule violation. Voluntary quit , except for good cause attributable to employer or

for an urgent or compelling reason such as family illness, domestic violence, etc.

Receipt of Separation pay except in connection with a plant closing or if required to sign release of claims against employer

Not available for and able to work in normal occupation.

Benefit Extensions Current benefit extensions

Emergency Unemployment Compensation 2008 (EUC08) Began July 6, 2008 – up to 13 additional weeks Modified November 21, 2008 to up to 20 weeks Mass. Triggered to a “high unemployment state” 6%+ TUR, added

a second Tier of EUC08 an additional 13 weeks. Requires base period earnings of 40 times WBA or 1-1/2 times

earnings in the highest calendar quarter and no eligibility for any state or federal UI.

EUC08 will end December 31, 2009. Extended Benefits (EB) Federal-State Extended Unemployment

Compensation Act 1970 Mass. Triggered onto EB effective May 16, 2009 when the state IUR

reached a 13 week average of 5% or more. Remains in effect in Mass. As long as the13 week average IUR

exceeds 5%. Potential duration of up to 13 weeks, but one criteria of duration is

39 weeks minus number of weeks of UI paid on UI claim. Base period earnings requirements same as EUC08. Benefit costs normally shared 50-50, state-federal.

Massachusetts Revenue Two types of employer financing:

Private Contributory & Reimbursable

Accounts maintained on approx. 187,000 Massachusetts Private Contributory employers.

Credits to accounts are contributions paid quarterly. Debits are benefits paid that the employer is responsible for,

along with an annual solvency assessment. Annual account balance is calculated each year after Sept.

30th. It may be a positive or negative balance. Reserve Percentage - Employer account balance is divided by

total taxable wages paid based on a $14,000 per worker wage base.

Reserve Percentage for State UI Trust Fund is also calculated = Sept. 30 Trust Fund Balance/Total Payroll of private contributory employers.

A B C D E F G

State Trust Fund Reserve Percentage

1.75% and

over

1.6% but less

than 1.75%

1.4% but less

than 1.6%

1.1% but less

than 1.4%

0.8% but less

than 1.1%

0.5% but less

than 0.8%less than 0.5%

Employer Reserve Percentages Negative Percentages

15 or more 7.80 8.74 9.78 10.96 12.27 13.75 15.40

13.0 but less than 15.0 7.40 8.29 9.28 10.40 11.64 13.04 14.61

11.0 but less than 13.0 7.00 7.84 8.78 9.83 11.01 12.34 13.82

1.0 but less than 3.0 5.00 5.60 6.27 7.02 7.87 8.81 9.87

0.0 but less than 1.0 4.60 5.15 5.77 6.46 7.24 8.11 9.08

Employer Reserve Percentages Positive Percentages

0.0 but less than 0.5 3.90 4.37 4.89 5.48 6.14 6.87 7.70

0.5 but less than 1.0 3.80 4.26 4.77 5.34 5.98 6.70 7.50

1.0 but less than 1.5 3.70 4.14 4.64 5.20 5.82 6.52 7.30

14.0 but less than 15.0 1.00 1.12 1.25 1.40 1.57 1.76 1.97

15.0 but less than 16.0 0.90 1.01 1.13 1.26 1.42 1.59 1.78

16.0 or more 0.80 0.90 1.00 1.12 1.26 1.41 1.58

Massachusetts Revenues (cont) Reimbursable Federal & Massachusetts law allows both governmental

& private non-profit (501C3) employers, as well as Indian Tribes to elect to reimburse for the full cost of their share of benefits paid to former workers,

Govt. election is for a period of two years, non-profit for one year. Must inform DUA in writing of change in election.

Billed monthly for cost of all benefits paid. No charges for benefits may go to the private

contributory Solvency Account. Any overpaid amounts must still be reimbursed, and not

refunded until recovered.

Economic Stimulus Bill - ARRATitle II Assistance for Unemployed Workers and Struggling Families

Extends Emergency Unemployment Compensation program from 3/31/09 to 12/31/09 with phase out to 5/31/10. Paid from general revenues – no repayment

Increase on weekly benefit payments by $25 with state agreement. Benefits and administration from general revenues. Weeks of unemployment through 1/1/10 with phase out ending 6/30/10.

Provides 100% federal funding for federal-state extended benefits (EB) through 1/1/10.

Special Transfers for UI Modernization. $7 billion incentive payments for state law provisions and $500 million for administration.

Economic Stimulus Bill (cont.)

Waiver of interest payments & accrual on “Title XII” loans through 12/31/10.

Limits federal income tax on UI payments by excluding the first $2,400 from gross income.

Dedicates $250 million to reemployment services for UI claimants, out of a total of $400 million for employment services.

COBRA premium subsidy of 65% for involuntarily unemployed for 9 months duration through the end of 2009.

Additional Information

Executive Office of Labor Workforce Development Website

http://www.mass.gov/eolwd

UI Modernization

$7 billion special transfers – Mass. share $161.3 million. Transfer by SOT to state’s UI Trust Fund. Incentive payments for state law modernization. Used for payment of UI benefits or may be appropriated for UI administration or reemployment

administration. $500 million for administration of states UI program and

state reemployment activities. Available to all states. Mass. Share $11.6 million. Will be transferred to state’s UI Trust fund but may not be used for benefits. Used to carry out changes to state law required to meet special

transfer requirements. Outreach to individuals eligible due to state law changes Improvement of benefits and tax operations. Staff assisted reemployment services for UI claimants.

Special Transfer Requirements $7 billion First 1/3

States Base Period, or an Alternate Base Period adopted, must include the most recent completed calendar quarter prior to filing of a claim.

Second 2/3’s. State law must meet 2 of the 4.1. Search for work in the benefit year must allow for part time work

search only. Base period history of part time employment can be required – majority of weeks of work

2. Individual not disqualified from UI for separation from work due to a compelling family reason, must include domestic violence,illness or disability of immediate family member, relocation with one’s spouse beyond commuting range and for change in spouse’s work location.

3. Approved training extension of 26 weeks.

4. Dependents allowance of minimum $15 per week, maximum not less

than $50 or 50% of WBA.