TALX has received information from the WORKFORCE West Virginia, that the unemployment taxable wage base will be increasing from $8,000 to $12,000 effective with the second quarter, 2009.

West Virginia Senate Bill 246 was passed on April 11, 2009 and the wage base change became effective with this passage. The state will be issuing a letter to employers in the near future. They have already contacted a few of the larger payroll providers.

It is highly unusual to have a wage base change in the middle of the year; credit these unusual economic times. Employers will need to immediately change their payroll systems to reflect the new wage base. Employers will not be required to file amended first quarter returns as the change was not effective until after the first quarter ended. However, employees who met the first quarter wage base of $8,000 will now be subject to tax on the next $4,000 of taxable wages.

Pat Powell

In these troubled times, many companies are being forced to make substantial staffing cut-backs. Announcements are coming daily with some industries being affected more than others. The automotive industry in particular is scrambling to "right-size" its workforce in an effort to avoid bankruptcy and as part of recovery plans associated with Federal Bailout grants (GM's Downsizing Strategy Moving With Great Efficiency | workforce.com.)

From an unemployment perspective it is essential to understand the impact a layoff will have on your company’s unemployment tax rate. In addition, failure to meet certain employee notification requirements under the Federal Warn Act could result in penalties and open the door to class action suits or individual employee lawsuits (TALX Bulletin Employer Downsizing.)

From a liability perspective, it is important to protect your company in the area of employment litigation (Nine Ways to Protect Your Company During Staff Reductions | workforce.com.)

Lastly, maintaining employee morale for those left behind can be a challenge. Treatment of exiting employees can say a lot about a company and has a tremendous impact on the productivity of the remaining workforce (In a Time of Layoffs, Keep Human Resources Humane - BusinessWeek.)

While workforce reductions are often reactionary resolutions to tough economic conditions, planning is essential. It is crucial that you know the impact of every decision made along the way.

Tammy Mullin

According to the Bureau of Labor Statistics employers took 2,933 mass layoff actions involving 299,388 workers in March. These are the highest levels on record. Mass layoff events increased by 164 from February and initial claims increased by 3,911. Twenty-six states reached program highs for March in terms of average weekly initial claims.

These types of unemployment numbers are taking their toll on the state trust fund balances. As of April 23, 14 states have borrowed money from the Federal Unemployment Fund. The outstanding loan balance is currently over $9.7 billion.

Both California and Michigan have already borrowed over $2 billion each. This is the first time since 1983 that any state has borrowed over $2 billion and it’s only April.

Pat Powell

The Employer Tax Services Group will be holding webcasts on May 6 & 7, 2009. These webcasts will focus on the impact of the recession on unemployment taxes for 2009 and beyond. The newly signed American Recovery & Reinvestment Act will be discussed in detail as well as Trust Fund solvency and subsequent Title XII Loans. Even though unemployment tax rates have been set for 2009, it's never too early to understand how the recession and new law changes will affect future tax payments. To attend one of the webinars, just click here.

Interesting controversy over Texas Governor Rick Perry’s announcement in March that he was rejecting additional unemployment funding because there were too many strings attached Texas Governor Rick Perry Rejects $555 Million In Stimulus Money - cbs2.com. He continues to make headlines and was even the brunt of jokes on The Colbert Report on April 20th. 

Other states are agreeing with Perry, just look at the press coming out of the State of Virginia recently Virginia Lawmakers Split on What's Best for Workers, Employers - washingtonpost.com.  

So why is this happening?  What are those strings everyone is talking about?  

Well, states will get a portion of $7 billion, if they have enacted or will enact an “alternative base period” – the earnings period used to establish a UI claim – as well as two of four other unemployment benefit expansions: 1) part-time worker eligibility; 2) compelling family reason quit eligibility, 3) benefits for dislocated workers in approved training; and 4) dependent allowances.  When the stimulus money runs out, Texas estimates that it will cost employers an additional $75 million a year TEXAS GOV. RICK PERRY STILL OPPOSES ACCEPTING STIMULUS MONEY FOR UNEMPLOYMENT BENEFITS.

While we know that the additional unemployment coverage will benefit the individuals out there desperate for work now, what we don’t know is whether that will have enough of an impact on the economy to outweigh the negative impact on employers struggling to stay in business.  At the end of the day, only time will tell.
For more information on the Stimulus package, visit the Industry Insights section under News and Events at www.talx.com .

Tammy Mullin

The current state of the national economy has adversely affected every state’s trust fund balance. When it becomes apparent that the trust fund does not have adequate reserves to pay unemployment benefits, the Governor may request a loan under Title XII of the Social Security Act. If a state has an outstanding loan balance on January 1st of two consecutive years and has not repaid the balance by November 10th of the second year, employers in that state are at risk of losing a portion of their FUTA tax credit. As of April 13th there are 14 states with Title XII loan balances and there are several other states that may need to borrow in the near future. Only employers in the state of MI are at risk of losing a portion of their FUTA tax credit in 2009. However there are at least 4 additional states that are at risk of losing credits in 2010 and significantly more in 2011 and beyond based on today’s outstanding loans. It will be important to stay abreast of this situation in order to budget for these potential tax increases.

Pat Powell

Not long ago I was asked to speak to our sales & service teams about the key HR trends in 2009 that would be impacting HR executives and, in particular, our clients. Armed with my own opinions, I then began looking at other sources. From recent and upcoming HR conferences, analyst’s predictions and several “What’s coming in 2009” webcasts, I saw several common areas surfacing. Interestingly, many of these common themes have a direct relationship with HR/Payroll service delivery:

1. The definition of “the workforce” will continue to evolve
2. New HR initiatives must show business value and help support key organizational goals
3. Enthusiastic employee engagement
4. Web 2.0 and the next generation of Internet for business

Paul D. Hamerman and Zach Thomas’ Forrester report, Trends 2009: Human Resource Management (November 21, 2008), identified the evolution of the workforce as one of the key trends. This is not to be confused with the generational workforce issues, but rather the types of workers that will make up the workforce. This includes more people who are not fulltime employees. However, the job of managing these workers from an HR perspective will need to be accommodated within the HRMS/HCM system structure.

I believe that this changing workforce dynamic means we must pay careful attention as to how we deliver HR/Payroll services and any resulting employee communication complications. Will these workers have access to the employee portal? Should they see all of the information available to all employees? Maybe not, since they are not traditional fulltime employees. Going forward, having a firm handle on the target audience, and their specific communication needs and challenges, will be essential to successfully adapting HR/Payroll service delivery channels.

Mike Smith

This weekend I read in The Wall Street Journal (Saturday/Sunday April 4-5, 2009 edition) that U.S. employers shed 663,000 jobs in March, pushing the nation's unemployment rate to its highest level since 1983. The article further went on to discuss "The jobless rate jumped to 8.5% from 8.1% - and many forecasters expect it to top 10% by later this year. The downturn, which started in December 2007, appears to be on track to surpass the two longest recessions since the Great Depression."

Pat Powell

For those of you who have read my bio, you will see that while I have been at TALX for a number of years, I have only been directly involved in the Unemployment business since May of 2008. Having been with TALX and having worked closely with the Unemployment Cost Management business leaders, I thought I knew what this business was all about. I mean seriously, a claimant files for unemployment, the employer responds with details about the circumstances behind the separation and the state decides. Simple - right?

Well maybe that is the general process, but it wasn’t until I started trying to really dig in to understand the business that I realized the error of my ways, or rather thoughts. On the surface, yes, the process is, claimant files, employer responds and state decides. However, how they file depends on the state in which they live, and what information the employer should provide depends on the state in which they operate. Whether or not the claimant will receive benefits for their particular situation depends, again, on the state.

Why so complex? Well, the states all run their own Unemployment Insurance (UI) programs. An employer pays taxes to both the Federal government and the State government. The Federal tax is used by the Department of Labor to, among other things, fund programs such as UI Modernization, make loans available to the states when their trust fund balances are low and provide incentives to encourage states to make certain legislative changes.

The state tax, the calculation of which again varies by state and is based on different factors by state, is used to pay benefits to claimants, cover administrative costs and cover socialized costs, which are benefits that are not directly charged against a specific employer. An example of a socialized cost would be unemployment benefits paid to former employees of a company that has gone bankrupt.

Given the complexity of the system, it is not surprising that claimants and employers are both confused. This confusion unfortunately adds to an already stressful situation. Whether you are a claimant or an employer, it is important to know the rules in your state. As a claimant, it could mean the difference between obtaining benefits or not. As an employer, not knowing the rules could result in paying unnecessary taxes. At the end of the day, the UI program is there to ensure that those claimants who are due benefits under the state’s program receive them and those claimants that are not due benefits under the state’s program do not.

Again, make sure you know the rules, your rights and your responsibilities.

Tammy Mullin

Well here goes my inaugural blog. With my many years of encouraging the delivery of HR services through technology, I picked this area for my blogging concentration. I might take a bend or two in the road, but my focus will be on the delivery of HR and payroll services. To me, leveraging technology to deliver HR services has always meant using technology to help HR teams better communicate with employees.

Recently I was preparing an update on 2009 HR trends (more on that in a coming blog) and in the midst of reviewing HR trends, I was overwhelmed with the fact that the strongest growing part of the workforce is the inactive workforce. Many are now speculating that we are headed to a 10% unemployment rate. With this dynamic in mind we really need to consider that the active employees still on the job need special attention.

Those remaining on the job are doing the work that had been done by others who are now part of the inactive ranks. Excellent delivery of HR services is essential to keeping these folks well-informed and engaged in the organization.

I was struck by a Stanley Bing article in the February 13th Fortune magazine.

http://money.cnn.com/2009/02/13/magazines/fortune/stanleybing/bing_column.fortune/index.htm

So what is the connection? It’s a great appeal to stay connected with those employees still doing the work.

Mike Smith