July 2, 2013
Get Reprieve from 10-Percent Unemployment Insurance Tax
Christie on Friday signed bipartisan
legislation to suspend an automatic,
10-percent surcharge on employers’
unemployment insurance (UI) taxes
that was scheduled to take effect.
The bill, S-2404/A-4112 /A-3675
(Eustace, Singleton, Wagner, McHose,
Madden, Oroho), which is expected to
save employers $300 million, was
supported by the New Jersey Business
& Industry Association (NJBIA) and
was overwhelmingly approved by both
the state Senate and Assembly.
“We applaud the bi-partisan efforts
of the Governor and Legislature in
suspending the 10-percent surcharge
this year,” said NJBIA Assistant
Vice President of Employment and
Labor Policy Stefanie Riehl.
“Employers cannot afford a
10-percent surcharge when they are
already paying between $370 and
$2,200 per employee in state UI
taxes, depending on the number of UI
claims filed against their accounts.
“The Legislature, Governor, and New
Jersey Department of Labor and
Workforce Development should also be
commended for their efforts over the
last several years to institute
long-term meaningful UI reforms and
permanently address solvency
issues,” added Riehl.
The surcharge on employers’ UI taxes
automatically kicks in when the UI
trust fund becomes insolvent. The
state has had to borrow over $1
billion from the federal
government. Employers across the
state have been forced to pay back
millions to make up the shortfall
since employer state UI tax rates
are largely determined by the health
of the UI trust fund.
When the UI trust fund is healthy,
employers pay a lower tax rate.
When fund reserves fall, there is a
shift to higher tax rates. Although
New Jersey has made great strides in
improving the health of the fund, it
is still operating in the red.
Without this bill, employers would
have been hit with a 10-percent
surcharge on yesterday (July 1), in
addition to already being shifted to
the highest tax rate.