HONOLULU — Governor David Ige has signed a bill that will temporarily lower unemployment insurance rates for some businesses and nonprofits.
The measure allows employers to pay, on average, less than half of what they would otherwise pay into the system, setting the employer contribution tax rate at a lower level with Schedule D for 2021 and 2022.
In 2021, the average Schedule H tax on employers would have been $1,800 per employee, per year. Act 1 reduces the average tax to $850– for a savings of $950 per employee per year.
In 2022, the average tax would have been $1,670 per employee, per year. Act 1 reduces the average tax to $790 – for a savings of $880 per employee, per year.
“Temporarily reducing unemployment insurance tax rates will help to contain the economic fallout from COVID-19 and expedite the state’s economic recovery,” Ige said when he signed the HB 1278. I signed (this bill) to protect employers from higher tax rates at a time when they can least afford it.”
The Unemployment Compensation Trust Fund (UCTF) had a reserve of $607.5 million as of November 2019, but the balance was depleted in June 2020 due to the extraordinary unemployment rate caused by the disruptions of the COVID-19 pandemic. The unemployment rate skyrocketed from 2.3% in March to 23.6% in April, because of measures taken to contain the state’s initial COVID-19 outbreak.
Setting the tax rate schedule at D will mean that all contributory employers will share in the replenishment of the UCTF and help re-establish the fund’s integrity. Schedule D’s tax rates are .2% to 5.8% while Schedule H’s rates begin at 2.4% to 6.6%.
The also law allows the department to omit benefit charges for employers in their annual rate calculation due to the event of COVID-19 in calendar years 2021 and 2022 and authorizes the Department of Labor and Industrial Relations (DLIR) to provide relief for certain non-profit employers, according to DLIR Director Anne Perreira-Eustaquio.
“Omitting the benefits charged to all contributory employers in 2021 and 2022 will result in a significant decrease in employer contributions,” Perreira-Eustaquio explained.
According to House Labor &Tourism Committee Chair Richard Onishi, this bill also allows the labor director to exempt or ordinate the unemployment experience for employers during the pandemic. He said that piece benefits nonprofit organizations.
“The reason we’re providing relief to them is because they’re not a for-profit organization, (and) much of their budget is on day-to-day, week to week type of experience,” Onishi said. “So they don’t have these reserves, to be paid for the unemployment benefits that some of their employees had to take advantage of.”
A recent survey by the Chamber of Commerce Hawai‘i shows a majority of business owners in Hawai‘i have experienced a significant reduction in revenues. Some businesses reported a reduction of 50% and others reported receiving zero revenue according to president and CEO of the Hawai‘i Chamber, Sherry Menor-McNamara.
The survey also revealed businesses would have faced anywhere from $7,000 to 1.5 million in unemployment insurance tax increase if the unemployment insurance rate wasn’t changed to schedule D.
“(This bill) will have a meaningful impact for businesses across the state and helping them keep the doors open, as well as keeping jobs available” Menor-McNamara said. “We know it’s going to be a long path towards economic recovery.”
Meanwhile, Perreira-Eustaquio said they’ve been working out some issues at the DLIR call center, including something they call “auto-calling”, which has made it difficult to get through on the line. DLIR is dedicating staff members to reach out to claimants with outstanding claims who haven’t been able to get service.
“These auto callers have been coming in on a daily basis and pretty much-kicking out individuals who don’t have auto calling to get into our system,” Perreira-Eustaquio said.
Susan Allyn, of Hanapepe, is one of those people who hasn’t been able to get service. The 70 year-old is the former owner of Savage Shrimp Kauai and worked for Living Foods Market at The Shops at Kukui‘ula after she sold Savage Shrimp in 2017.
She was laid off from Living Foods Market on March 21, 2020. Living Foods Market closed their doors a month later.
Allyn was receiving unemployment benefits last year until they suddenly stopped on Dec. 23 of 2020.
“There was no guidance on my Unemployment portal on what to do,” Allyn said. “I was just cut off.”
She started getting messages in her inbox explaining she was disqualified “for no apparent reason”.
“This went on for about 3 weeks. I could not get through to them on the phone or if I did, after a 3-hour hold, I was hung up on,” Allyn said.
After weeks of trying to get through at the called the DLIR call center, Allyn said she finally reached a staff member who told her she was disqualified because when she entered her claim, it stated she was not able or available for work. Allyn said she’s been available for work since March 24, 2020.
Department of Labor and Industrial Relations’ (DLIR) spokesperson Bill Kunstman said he could not give out any information on Allyn’s case, but emphasized all claimants have the right to appeal a determination or a decision within 10 days of the notice through the portal at www.labor.hawaii.gov, email at email@example.com or phone at 274-3141, ext. 6-8930.