Staff Report
Published June 15, 2011

Gov. Nikki Haley has signed into law enabling legislation to give employers some relief on the new and much higher taxes levied on employers since Jan. 30.

“We believe this bill will keep companies from laying off thousands of employees and allow them to start hiring thousands of folks back to work,” said John DeWorken, who has represented staffing companies and other large employers on the issue.

The bill Haley signed, H.3762, was so-called enabling legislation that establishes rules for the budget bill, which is separate legislation.

The higher rates, which in some cases soared by 800%, resulted from the impact of the recession, which created waves of people losing their jobs and seeking unemployment benefits.

“We believe this is the most important bill the Legislature passed this year,” DeWorken said. “We now will wait to see how much the General Assembly will appropriate toward relief.”

The Senate put $100 million into the budget to begin repaying loans the federal government made to the state to keep its unemployment benefits system afloat. The House raised the amount to $146 million. The exact amount will be determined in a House-Senate budget conference committee. Legislative rules require that the money be appropriated in the budget, with enabling rules passed in a separate bill.

DeWorken said the law does the following:

• Directs that the appropriations go toward state unemployment tax relief for businesses in tiers 2 through 20, which results in reductions up to 25% for 2011.
• State unemployment tax reductions are retroactive to January.
• Seasonal employees may be ineligible for unemployment benefits, resulting in a 3% reduction in state unemployment tax costs to businesses.
• New companies come in at tier 12 for the first 12 months, which is a savings of approximately $200 per employee per year for new companies.
• For 2011, companies on a payment plan will pay 0.25% penalty per month (previously set at 1% per month).
• Companies that have a positive state unemployment tax balance will be in no class higher than class 12 for 2011 only.
• Reduction of benefits for the newly unemployed to 20 weeks from 26 weeks, resulting in an 8% reduction in overall state unemployment tax costs to businesses.