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New law protects small business from hefty contributions
Gov. Chris Christie Friday signed legislation into law that is designed to protect New Jersey small businesses by preventing a devastating tax hike of up to $683 per employee for employers who fund the Unemployment Insurance Trust Fund.
The law maintains revisions made by Christie in his June 24 conditional veto of the legislation. The governor sees the revisions as meeting his goals of maintaining reforms on unemployment insurance eligibility, minimizing the tax impact on businesses, and setting a course for the effort to return the unemployment fund to solvency.
"There is no question that such an onerous a tax hike right now on New Jersey's job creators would seriously damage our economy and derail our recovery," Christie said. "I am thankful to the Legislature and the bill's sponsors for coming together to mitigate the financial impact on our state's small businesses, while taking the necessary steps to begin restoring solvency to the system."
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The new law maintains the key elements of the governor's original proposed changes to the fund and those of the sponsors of S-1813: averting an automatic, per-employee tax increase on July 1 of up to $683 that would have been needed to finance an insolvent fund. Instead, the average increase will be reduced to $130 per employee.Additionally, the law includes changes to unemployment insurance benefits for employees who lose their jobs due to misconduct – reforms which will result in estimated annual savings of between $150 and $175 million, significantly helping to restore the fund's solvency over time. A three-tiered structure is now established – misconduct, severe misconduct and gross misconduct – which either prohibit payment of unemployment benefits or extend the waiting period before benefits can be paid.
Christie's conditional veto also provided for the creation of an Unemployment Insurance Fund Task Force to study and assess, among other things, the current unemployment insurance crisis and recommend how the state can restore the trust fund to solvency in a way that balances the interests of workers, employers and the overall economy. The task force will replace the Employment Security Council, a group which has not met in over a five years.
The task force will conduct a review of all eligibility standards, benefit levels, definitions in the unemployment compensation law, statutory payroll tax triggers, contributions and experience rating tables and more.
In February, in the face of a fiscal emergency and 10.1 percent unemployment, Christie proposed changes that would suspend an automatic employer payroll increase of as much as $683 per employee that would have been need to fund an insolvent unemployment fund after years of being raided by past administrations.
The fund ran out of cash in March 2009, forcing New Jersey to borrow, to date, $1.75 billion from the federal government to pay unemployment claims. By law, business payroll withholding for unemployment insurance automatically increases once the fund goes below a certain level. On July 1, employers would have experienced an average per-employee hike of $400 – a 52 percent increase – while some employers would see an increase of up to $683.
– TOM HESTER SR., NEWJERSEYNEWSROOM.COM
