MassLive – When the state Department of Unemployment first updated its employer contribution rates for 2021, Suzanne Murphy thought she spotted a mistake.
The solvency fund assessment, one of several factors used to calculate a business owner’s unemployment insurance contribution rate, jumped from 0.58% to 9.23% for 2021. For Murphy, CEO of Unemployment Tax Control Associates in Springfield, that meant an employer contribution rate that’s twice as high and a tax increase of thousands of dollars.
“I said it’s got to be an error,” said Murphy, CEO of Unemployment Tax Control Associates in Springfield. “It must not have reconciled everything based on the latest UI legislation that was passed.”
Despite the passage of an unemployment insurance law that legislators praised as a relief package for employers, business owners are getting hit with higher tax bills due to what some call an unintended consequence or a loophole of the pandemic-era unemployment crisis.
The state’s unemployment levels have stabilized since they hit record-high levels in the first months of the pandemic, but the million-plus claims swallowed the state’s UI trust fund. The fund is expected to face a roughly $4 billion deficit by the end of 2021 — in big part due to federal advances that the state has to repay.