Unemployment Insurance Rate Hikes?

While the new rates are not finalized, Maryland businesses are being told to expect a significant rate hike for next year. Around the nation, at least 20 states have seen their unemployment funds totally depleted and have been borrowing from the federal government.

The Maryland state director for the National Federation of Independent Business, a trade group for small companies, pointed to an expected significant increase in the rates that employers will have to pay to beef up the state's unemployment insurance trust fund. That fund, which had about $900 million a year ago, was down to $341 million in mid-September as the ranks of the unemployed have swelled, according to state figures.

For the week ending Sept. 26, Maryland paid out $18.2 million in unemployment benefits, 55 percent more than in the same week a year ago, according to state figures. Maryland’s unemployment rate was 7.2 percent in August, an increase from 4.5 percent a year ago. The number of unemployed in August, 213,574, was 57 percent above the level in August 2008.

A law providing jobless benefits for laid-off part-time workers took effect in the spring. In addition, another law that took effect last week which will establish penalties and an investigative process for employers who misclassify employees as independent contractors and others in the construction and landscaping industries.

State law requires the Department of Labor, Licensing and Regulation to review the trust fund by Sept. 30 and determine the following year’s tax. Calculations should be completed by mid-October, with the new rates effective Jan. 1. Under the state’s unemployment tax schedule, employers pay taxes on the first $8,500 paid to employees starting Jan. 1. Businesses that have not laid off workers in the last three years pay the lowest rates. Businesses paying the minimum per-employee amount of $51 this year can expect that to rise by at least $100 next year. With the recession, there was little that could have been done to stop the increase because of the job losses being structural in nature.