House Passes Unemployment Solvency Fix

May 20, 2021

The Massachusetts House of Representatives passed a measure on May 18th providing relief to employers impacted by the dramatic increase in the DUA Solvency rate. The bill needs to be approved by the Senate and signed by the Governor in order to go into effect.

Below you will find the summary provided by AIM about the proposed legislation. We will keep you advised of any changes as the bill passes through the Senate and is reviewed by the Governor.

AIM Summary

The Massachusetts House of Representatives adopted a measure to provide relief to employers affected by the increase in COVID-related Unemployment Insurance solvency assessments.

The plan, if adopted by the Senate and signed by the governor, will lower the solvency assessment from 9.23 percent to 1.12 percent and spread the $7.4 billion bill for COVID unemployment benefits over 20 years through borrowing.

Under the proposal, payment for first-quarter unemployment insurance bills will be delayed until July 31, when payment for second quarter will also be due and the solvency cost reduced. Employers who already paid their 2021 first-quarter bills will receive a tax credit against future UI assessments.

The state will remove approximately $7.4 billion in COVID-19 claims from the solvency account and place that money in a newly created COIVD-19 account. The COVID account will be paid off through a combination of 20- year bonds and a special COVID-19 assessment on employers that will be spread out over several years AIM has been working with state and federal policymakers to find a solution to minimize the impact of the solvency assessment on employers since first-quarter bills went out in early April. Employers were not expecting the large increase in the solvency assessment rate, and many were overwhelmed when bills arrived.

Since that time, AIM has worked tirelessly to lower the solvency assessment and delay quarterly payments. “It is gratifying to see a plan that will significantly reduce UI bills for employers,” said John Regan, President and CEO of Associated Industries of Massachusetts.

The House also used the bill passed to reject Governor Charlie Baker’s amendment from last month to the COVID-19 emergency sick-leave legislation. Under the new COVID-19 emergency sick leave program, employers who are not covered by the Families First Coronavirus Response Act (those with more than 500 employees) must provide up to 40 hours of paid COVID-19 sick leave for full-time employees who become sick with COVID-19 or seek to obtain a vaccine. In exchange for providing the leave, employers will be reimbursed by the Department of Administration and Finance. AIM is supportive of the sick-leave reimbursement proposal, as it mirrors the language passed by the Legislature originally and will fully compensate members for paid sick leave. The program is capped at 40 hours and has a maximum benefit of $850.