Unemployment veto of federal mandate will NOT cause higher UI taxes
Associated Industries of Missouri president Ray McCarty recently met with officials from the Missouri Department of Labor and Industrial Relations (DOLIR) regarding reports that employer federal unemployment taxes would increase due to failure of the legislature to override the governor’s veto of HB 611.
The bill would have provided a better definition of “misconduct” and also contained language that specifically would have allowed Missouri to remain in compliance with new federal rules regarding the use of fraud penalties recovered from claimants and noting when an employer’s account may be charged for overpaid unemployment claims. The Missouri Department of Labor and Industrial Relations confirms that the legislature’s recent failed attempt to override the governor’s veto on House Bill 611 will not result in higher unemployment taxes on Missouri’s employers.
As authorized by state statute in section 288.390, RSMO, DOLIR has enacted two emergency rules and accompanying regulations to keep the state in compliance with the federal unemployment program. That statute allows DOLIR to enact rules to keep Missouri’s program in compliance with federal law when the change is caused by amendment of the Federal Unemployment Tax Act or the Federal Social Security Act or other related federal laws.
Emergency Rule 8 CSR 10-4.210 implements one of the federal mandates, requiring the Division of Employment Security (DES) to track any overpaid unemployment benefits that were made because the employer or agent did not timely or adequately respond to requests from the DES for information relating to a claim for unemployment benefits. Under the new rule, an employer’s unemployment account may be charged if the employer or the employer’s agent was at fault for failing to timely or adequately respond to a request for information relating to the claim for unemployment benefits and the employer or agent has established a pattern of failing to respond timely or adequately to such requests.
Emergency Rule 8 CSR 10-3.150 implements the other federal mandate, requiring 15% of fraudulent unemployment payments recovered from claimants to be deposited into the state’s unemployment compensation fund. While the amount due from claimants will not change, a portion of such recovered money will be deposited in the state UI fund.
“These new rules keep Missouri in compliance with federal law,” said Associated Industries of Missouri president Ray McCarty. “While we are disappointed lawmakers were not able to override Governor Nixon’s veto and pass legislation that would reign in the abuse going on in the unemployment system, at least businesses that follow the rules on unemployment compensation will not see hikes in their federal unemployment taxes because of the new federal laws.”
If Missouri’s unemployment program had fallen out of compliance with federal government guidelines, Missouri employers could have faced large increases in their unemployment taxes.
“This action should lay to rest fears that Missouri employers are going to lose all of their federal unemployment tax credits,” said McCarty. “Missouri employers still must pay higher federal unemployment taxes, not because of this issue, but because of the amount the state has borrowed from the federal government to pay unemployment claims. We will continue to work with all parties to secure passage of legislation that will allow us to reign in the abuse of the unemployment system and address some of the outrageous situations we hear from our members on a regular basis.”