Unexpected Unemployment Insurance Increases
We write today regarding a situation that some of you may already be aware of, but want to make sure that everybody hears about it and prepares for any potential impact.
As we know, both the Governor and the Legislature took action to address the increase in the rate schedule for UI. However, as rates were sent out this week, many operators and other businesses have seen significant increases in their UI obligations.
The increase is attributed to an exponential rise in what is called the solvency rate. According to forms issued by DUA:
The solvency rate used in the calculation of each company's UI experience rate for 2021 is 9.23% and increase from last year's rate of 0.58%
While a moderate increase in UI was expected for this year, this rate increase is exponentially more than anybody would have thought. The solvency rate has very rarely been brought up by anybody in government over the last 6 months. Historically, the solvency rate hovers between .5% - 2%. Prior to a communication sent out by DUA this week, nobody had mentioned publicly or privately the new 9.23% rate.
We have been engaged with The Governor's office, members of the Legislature, and other business stakeholders, and collecting data from different members to gauge the true impact of this increase. Many in the legislature have expressed shock at the increases that they are hearing from operators in their district.
It is unclear what potential solutions are available to us in the short-term. We are fully engaged with trying to address this unexpected situation.
We will keep you updated as we learn more.