New York Unemployment Insurance Reforms

October 15, 2013

The New York State Department of Labor (DOL) has recently made significant changes to the New York Unemployment Fund.  The DOL’s reforms alter the rules on severance payments, raise the benefit rates for unemployed workers, and institute employer penalties for responding late or with incomplete information to DOL inquiries. The new laws will also raise the Federal Unemployment Tax Act assessment threshold, penalize individuals who fail to repay overpayments, and change the definition of “actively seeking work” in order to be eligible for benefits.

The New York State Department of Labor (NYSDOL) has issued a fact sheet outlining these reforms.

Increase in Benefit Rates for Unemployed Workers

The DOL reforms will increase both the minimum and maximum weekly rate given to unemployed individuals from $64 to $100 and $405 to $420, respectively. This change will not come into effect until October 6, 2014. Additional increases indexed to 50% of the New York average weekly wage will be made thereafter.

Unemployment and Severance

Effective January 1, 2014, if an employer provides severance pay to an employee within 30 days after the employment relationship ends and the amount is greater than the maximum weekly rate, then the individual cannot collect unemployment benefits. Once the severance pay is exhausted, meaning it is no longer greater than the weekly maximum rate, the employee becomes eligible and can apply for unemployment benefits.

Penalties for Late or Incomplete Responses

Normally an employer’s account will be credited if the DOL or an administrative law judge determines that an ineligible individual erroneously received benefits or if the individual was overpaid. As of October 1, 2013, employers can lose their right to the credit by either providing incomplete answers or responding late to any DOL request for information concerning the claim.

The DOL will only excuse the employer if the failure to timely respond was due to DOL error or due to a “disaster emergency as declared by the Governor…or the President.” The DOL reform applies pressure on employers to carefully complete its requests for information and return the answers by the date specified.

Unemployment Insurance State Information System

Beginning later this year, the State Information Data Exchange System (SIDES) will be made available free of charge to employers so that they can respond electronically at the DOL website to DOL’s request for employee separation information.

Employers that do not have an Unemployment Insurance Online Services account can register for SIDES at the DOL’s Online Services for Employers webpage. Once an Online Services account has been registered, employers should call 1-888-899-8810 and choose Option 3 to review their account with a representative and complete registration for SIDES. This service also allows employers to access their unemployment insurance account information and to file quarterly returns on-line.

Increase in Employer Contributions

Beginning January 1, 2014, employer contributions will increase based on the Federal Unemployment Tax Act. Under the Act, the employer tax is based upon the number of employees and the employer’s experience rating. Currently, the tax is assessed only on the first $8500 of each individual’s wages. In 2014, the base amount will be increased to $10,300 and will gradually rise on January 1 of each subsequent year. This will result in a numerically higher tax contribution per employee.

Overpayment Fraud

After October 1, 2013, individual claimants who are overpaid or improperly awarded benefits have 12 months to pay the money back to the DOL. If the individual fails to do so, he/she must pay a 15% penalty on the overpayment or a $100 fine, whichever is higher, in addition to the amount improperly awarded. Further, the individual must forfeit four days of future unemployment benefits for every week that he/she was overpaid.

Standard for Eligibility 

In another attempt to limit fraud, the DOL revised the definition of “actively seeking work”, the standard used to determine unemployment insurance eligibility for individuals. Beginning on January 1, 2014, the definition will change from “ready, willing and able to work” to “engaged in systematic and sustained efforts to find work.” This is a heightened standard that requires individuals to conduct expanded weekly work search activities, including meeting with DOL Career Center staff to develop and share with the DOL individualized work search plans and records of work search activities.

Impact on Employers

The important changes to the New York State Unemployment Insurance system will generally result in an increase in employer costs. Not only do the reforms specifically increase the unemployment taxes an employer will have to pay, but the changes also penalize an employer for failing to provide complete information, whether incidental or not, and for responding late to DOL inquiries. On the other hand, if the employer provides severance pay within 30 days and the amount is greater than the maximum weekly rate, the employee would not receive unemployment payments.

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