State unemployment agencies have had to monitor their unemployment trust funds from the inception of the program back in 1937.  When most employers think of how a state insures a healthy trust fund they think of the annual adjustment made to the the unemployment tax rate schedule.  While it is true that each year every state unemployment agency evaluates the trust fund balance and following year’s budget to determine which rate schedule it is necessary to operate under to keep a positive balance, there are many other factors that  are evaluated and adjusted.

Two other methods of insuring proper trust fund balances are by managing the taxable wage base and weekly benefit amounts.  Many state unemployment agencies evaluate these amounts annually and adjust them based on the average salaries in the state.  There are a few states that have not adjusted these factors in several years, if not decades, including California and Florida.  While there is a definite need to adjust them, this can be seen as a not employer friendly act and therefore certain states avoid this adjustment.

Employer non-charging is another factor that can affect the trust fund balance.  This is when the state unemployment agency does not apply charges to an employer’s tax account when a claimant collects benefits either because it was a discharge for misconduct, a voluntary quit that was not work related or for some other state determined reason.  Most states have not adjusted this factor, even after the recession.  The exception to this is the State of New York, which no longer grants employer non-charging for any base period claims.  (Contact CCC for a base period explanation)

After the Great Recession, State Unemployment Agencies had to look at their unemployment programs and determine what changes needed to be made to avoid having depleted trust funds when another recession occurs.  The UI Integrity Legislation is aiming to protect UI trust funds by reducing improper payments to claimants that can affect the trust funds. Many states have started to use the financial penalties placed on employers to help increase their trust fund balances. Again, these penalties can range from a per claim cost or by charging the employer for all benefits received by a claimant if the employer fails to respond timely or adequately on an unemployment claim.  (We are not going to discuss this in depth here, for additional information on UI Integrity Legislation, please contact your Account Executive.)

Prior to the recession, 26 weeks duration of benefits was the “gold standard” for a claimant to be able to collect unemployment benefits in each state.  A few states had a longer duration such as Montana at 28 weeks, but rarely shorter.  CCC has noted that there is a new trend within state unemployment agencies to cut the weeks a claimant can collect benefits and it’s dramatic.

The following chart includes the factors the state unemployment agencies are using for 2016.

Screen Shot 2016-05-17 at 10.12.07 AM

These factors are adjusted annually.  Employers should pay attention to each factor as they have an effect on the payments they will be making to the state unemployment agency.  If you have questions regarding any this article or any unemployment questions contact your CCC Account Executive or CCC at (800) 207-6926 or contact@corporatecostcontrol.com.


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