Massachusetts Unemployment Insurance

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A Federal-State Program
Edward Malmborg
Director Division of Unemployment Assistance

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Massachusetts Unemployment Insurance

  1. 1. Massachusetts Unemployment Insurance A Federal-State Program Edward Malmborg Director Division of Unemployment Assistance
  2. 2. Federal – State Unemployment Insurance Program <ul><li>The UI system was established in 1935 as a joint Federal – State Program </li></ul><ul><li>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. </li></ul>
  3. 3. Federal Unemployment Tax Act (FUTA) <ul><li>Established a federal payroll tax on employers. </li></ul><ul><li>Primarily a tax act, includes coverage, and definitions of wages, employers, employment. </li></ul><ul><li>Also defined unemployment “compensation” & implemented the basic philosophy of the program. </li></ul>
  4. 4. FUTA Payroll Tax <ul><li>Implemented to defray cost of administration of UI program. </li></ul><ul><li>Also provides federal funding of extended benefits, and loans to states with insolvent UI trust funds. </li></ul><ul><li>Provides for a 6.2% tax rate on a per worker wage base of $7,000 </li></ul><ul><li>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. </li></ul>
  5. 5. Massachusetts UI - Benefits <ul><li>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. </li></ul><ul><li>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. </li></ul><ul><li>Earnings requirement minimum of $3500 in BP and 30 times WBA. </li></ul><ul><li>Weekly benefit amount (WBA) equals ½ of calculated average weekly wage. AWW = amount earned in highest 2 quarters/26 weeks. Current maximum $628. </li></ul><ul><li>Dependency allowance adds $25 per dependent child under 18, or 24 if a full time student. </li></ul>
  6. 6. Massachusetts Benefits (cont) <ul><li>Maximum total benefits = lesser of 36% of BP earnings or 30 times WBA – so maximum duration = 30 weeks. </li></ul><ul><li>Except during a period of federally funded extended benefits = 26 weeks. </li></ul><ul><li>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. </li></ul><ul><li>Disqualification: </li></ul><ul><ul><li>Discharge for deliberate misconduct or company rule violation. </li></ul></ul><ul><ul><li>Voluntary quit , except for good cause attributable to employer or for an urgent or compelling reason such as family illness, domestic violence, etc. </li></ul></ul><ul><ul><li>Receipt of Separation pay except in connection with a plant closing or if required to sign release of claims against employer </li></ul></ul><ul><ul><li>Not available for and able to work in normal occupation. </li></ul></ul>
  7. 7. Benefit Extensions <ul><li>Current benefit extensions </li></ul><ul><ul><li>Emergency Unemployment Compensation 2008 (EUC08) </li></ul></ul><ul><ul><ul><li>Began July 6, 2008 – up to 13 additional weeks </li></ul></ul></ul><ul><ul><ul><li>Modified November 21, 2008 to up to 20 weeks </li></ul></ul></ul><ul><ul><ul><li>Mass. Triggered to a “high unemployment state” 6%+ TUR, added a second Tier of EUC08 an additional 13 weeks. </li></ul></ul></ul><ul><ul><ul><li>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. </li></ul></ul></ul><ul><ul><ul><li>EUC08 will end December 31, 2009. </li></ul></ul></ul><ul><ul><li>Extended Benefits (EB) Federal-State Extended Unemployment Compensation Act 1970 </li></ul></ul><ul><ul><ul><li>Mass. Triggered onto EB effective May 16, 2009 when the state IUR reached a 13 week average of 5% or more. </li></ul></ul></ul><ul><ul><ul><li>Remains in effect in Mass. As long as the13 week average IUR exceeds 5%. </li></ul></ul></ul><ul><ul><ul><li>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. </li></ul></ul></ul><ul><ul><ul><li>Base period earnings requirements same as EUC08. </li></ul></ul></ul><ul><ul><ul><li>Benefit costs normally shared 50-50, state-federal. </li></ul></ul></ul>
  8. 8. Massachusetts Revenue <ul><li>Two types of employer financing: </li></ul><ul><ul><li>Private Contributory & Reimbursable </li></ul></ul><ul><li>Accounts maintained on approx. 187,000 Massachusetts Private Contributory employers. </li></ul><ul><li>Credits to accounts are contributions paid quarterly. </li></ul><ul><li>Debits are benefits paid that the employer is responsible for, along with an annual solvency assessment. </li></ul><ul><li>Annual account balance is calculated each year after Sept. 30th. It may be a positive or negative balance. </li></ul><ul><li>Reserve Percentage - Employer account balance is divided by total taxable wages paid based on a $14,000 per worker wage base. </li></ul><ul><li>Reserve Percentage for State UI Trust Fund is also calculated = Sept. 30 Trust Fund Balance/Total Payroll of private contributory employers. </li></ul>
  9. 9. 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
  10. 10. Massachusetts Revenues (cont) <ul><li>Reimbursable </li></ul><ul><li>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, </li></ul><ul><li>Govt. election is for a period of two years, non-profit for one year. Must inform DUA in writing of change in election. </li></ul><ul><li>Billed monthly for cost of all benefits paid. </li></ul><ul><li>No charges for benefits may go to the private contributory Solvency Account. </li></ul><ul><li>Any overpaid amounts must still be reimbursed, and not refunded until recovered. </li></ul>
  11. 11. Economic Stimulus Bill - ARRA Title II Assistance for Unemployed Workers and Struggling Families <ul><li>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 </li></ul><ul><li>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. </li></ul><ul><li>Provides 100% federal funding for federal-state extended benefits (EB) through 1/1/10. </li></ul><ul><li>Special Transfers for UI Modernization. $7 billion incentive payments for state law provisions and $500 million for administration. </li></ul>
  12. 12. Economic Stimulus Bill (cont.) <ul><li>Waiver of interest payments & accrual on “Title XII” loans through 12/31/10. </li></ul><ul><li>Limits federal income tax on UI payments by excluding the first $2,400 from gross income. </li></ul><ul><li>Dedicates $250 million to reemployment services for UI claimants, out of a total of $400 million for employment services. </li></ul><ul><li>COBRA premium subsidy of 65% for involuntarily unemployed for 9 months duration through the end of 2009. </li></ul>
  13. 13. Additional Information <ul><li>Executive Office of Labor Workforce Development Website </li></ul><ul><ul><li>http://www.mass.gov/eolwd </li></ul></ul>
  14. 15. UI Modernization <ul><li>$7 billion special transfers – Mass. share $161.3 million. Transfer by SOT to state’s UI Trust Fund. Incentive payments for state law modernization. </li></ul><ul><ul><li>Used for payment of UI benefits or </li></ul></ul><ul><ul><li>may be appropriated for UI administration or reemployment administration. </li></ul></ul><ul><li>$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. </li></ul><ul><ul><li>Used to carry out changes to state law required to meet special transfer requirements. </li></ul></ul><ul><ul><li>Outreach to individuals eligible due to state law changes </li></ul></ul><ul><ul><li>Improvement of benefits and tax operations. </li></ul></ul><ul><ul><li>Staff assisted reemployment services for UI claimants. </li></ul></ul>
  15. 16. Special Transfer Requirements $7 billion <ul><li>First 1/3 </li></ul><ul><ul><li>States Base Period, or an Alternate Base Period adopted, must include the most recent completed calendar quarter prior to filing of a claim. </li></ul></ul><ul><li>Second 2/3’s. State law must meet 2 of the 4. </li></ul><ul><li>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 </li></ul><ul><li>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. </li></ul><ul><li>Approved training extension of 26 weeks. </li></ul><ul><li>Dependents allowance of minimum $15 per week, maximum not less than $50 or 50% of WBA. </li></ul>

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