The Unemployment Insurance (UI) Trust Fund is solvent for the first time in five years thanks to NJBIA-backed reforms enacted by the Christie Administration and the Legislature. Testifying before the Assembly Budget Committee on April 14, Labor Commissioner Harold Wirths said the reforms helped return the fund to solvency two years before expected, which will save employers $213 million this year, avert a July 2014 tax increase, and should lead to lower UI taxes in the future.
Most NJBIA members have to pay into the UI fund, and taxes on employers are raised automatically when there is not enough money to pay unemployment benefits. Like other states, New Jersey’s UI fund was depleted as past administrations diverted $4.6 million in contributions to other parts of the budget. Once the economic recession hit and unemployment benefits increased dramatically, the depleted fund was unable to meet the demand. Repairing the damage done to the UI fund has been one of NJBIA’s top priorities over the last several years. NJBIA led a bi-partisan Task Force and worked with the Governor’s office and lawmakers to develop policies that helped businesses weather the UI crisis with the least possible impact on the economy.
A constitutional amendment championed by NJBIA has prevented further diversions and will protect employers’ contributions to avoid such crises in the future. NJBIA also was a strong advocate for a legislative change to stop the payment of benefits for people fired due to misconduct. These efforts were coupled with aggressive anti-fraud initiatives and other significant reforms made by the NJ Department of Labor, saving $600 million.
Employers should remember that although the state tax rate is not expected to increase, they may still be charged an assessment required by federal law to pay interest on federal loans used to cover shortfalls in previous years. The last assessment is expected to be mailed this May and total approximately $2.81 per employee.
For more information, contact NJBIA at 609-393-7707