Today, State Senator Julie Kushner (D-Danbury), Senate Chair of the Labor Committee, led her colleagues in the State Senate as they approved legislation that removes COVID-19 related layoffs from the unemployment experience account. As the unemployment experience rate depends on the amount of benefits former employees received in the three previous years, the impacts of the COVID-19 pandemic on unemployment could serve to cause further financial damage to businesses already struggling with economic downturn. This legislation seeks to limit further fiscal issues amid an already difficult economy.
“With hundreds of thousands of layoffs in the early stages of the COVID-19 pandemic, our state’s employers and businesses struggled mightily and are still fighting to recover from the pandemic’s worst effects,” said Sen. Kushner. “The last thing they need is to be financially harmed for those layoffs, but without these changes to those policies, they’ll be hit again. This legislation will preserve the experience rate for thousands of businesses and make sure they are not restricted as they fight to return to normal.”
House Bill 5377, “An Act Concerning The Removal of COVID-19 Related Layoffs From The Unemployment Compensation Experience Account,” will disregard employers’ benefit charges and taxable wages between July 1, 2019 and June 30, 2021 when calculating the employer’s unemployment tax experience rate for taxable years starting on/after January 1, 2022. This otherwise means unemployment benefits paid to an employer’s former employees during that period will not impact the employer’s experience rate.
For regular employers, their experience period will disregard an employer’s benefit charges and taxable wages during the 2019-2021 time period when applicable. For new employers, also known as employers that have not been chargeable with benefits for a period long enough to have a calculatable experience rate, the legislation also applies. In 2022 and beyond, the five-year benefit cost rate will be calculated without the benefit payments and taxable wages for the 2020 and 2021 calendar years, not impacting a rate given to a new employer.
From March 13 to June 15, 2020, Connecticut received more than 600,000 new unemployment claims, with as much as $884 million paid out in unemployment benefits during that time, according to the Connecticut Mirror. Early closures of businesses and policies meant to protect public health had a negative impact on many businesses, leading to unprecedented spikes in unemployment and requiring this legislation.