On February 22, 2010, the Senate approved (62-to-30 margin) a motion to proceed with the $15-billion jobs package offered by Senate Majority Leader Harry Reid, D-Nev., which focuses on the immediate effect of hiring. The Senate passage of Hiring Incentives to Restore Employment (HIRE) Act (H.R. 2847) is an important step in the effort to put Americans back to work. The provisions of the bill include: a payroll tax holiday for certain new hires, an extension of the Build America Bonds program to existing tax credit bonds, an extension of highway authorizations, and a one-year extension of higher expensing thresholds.

On February 23, 2010, the Senate will convene at 10:00 AM. The Senate will then resume consideration of the post-cloture debate on the House Message to the Senate amendment of H. R. 2847 (Jobs for Main Street Act).  The Senate will recess from 12:30 – 2:15 for party caucuses. A final vote on the measure is expected within the next two days.

Following the vote Reid stated, by the end of February he would move to the remainder of the jobs bill introduced by Senate Finance Committee Chairman Max Baucus, D-Mont., and ranking member Charles E. Grassley, R-Iowa, that includes a package of tax extenders and other tax-related proposals to spur hiring and help stabilize the economy.

President Obama called the Senate vote "an important step forward" in job creation. The bill includes several of President Obama’s top priorities for job creation, including tax incentives for hiring and small business investment.

Angela Lockman

With the American Recovery and Reinvestment Act (ARRA) provisions set to expire, emergency unemployment benefits will end for millions of Americans. Senate action is required in order to extend the ARRA. Senator Reid has indicated that the Senate will take up the measure next week. With that in mind, the UI Coalition sent a letter to the members of the US Senate requesting that they consider the following:

• Extend the waiver of interest on loans to states to pay unemployment compensation through 2012.

• Waive the FUTA penalties on employers in states borrowing to pay unemployment benefits through 2011.

• Reduce the Federal Unemployment Tax.

• Provide $30 million in additional targeted administrative UI funding in fiscal years 2010 and 2011.

These provisions are designed to reduce the costs of unemployment to employers and enable them to create jobs thus aiding in the country’s economic recovery.

A copy of the letter as well as a more detailed explanation of each provision is attached.

This issue has been around since the very early years of the unemployment insurance (UI) program in the United States: Where do you report an employee’s wages if the employee works in more than one state or in a different state than the employing company is located?

While in general, workers’ wages are reported to the state where the work is performed, it became clear early on that many employers had workers that crossed state lines and they wanted to avoid duplicate taxation of these wages. Therefore, an agreement was signed between the states providing a methodology known as “localization of work” to determine where wages should be reported. The US Dept of Labor developed model legislation that was passed into law in every state during the 1940’s. An agreement between Canada and the United States was signed in 1947 to include Canada in the localization of work agreement to avoid duplication of taxation when workers crossed the border.

To insure uniform interpretation of the localization of work provisions, the US Dept of Labor issued an Unemployment Insurance Program Letter (UIPL) No. 291 on July 1, 1952. I had the distinct pleasure, as Chief of Tax for the US Dept of Labor, of updating and re-releasing this information on May 10, 2004, as UIPL No. 20-04. This UIPL still serves as a guide to the business community, all states, and Canada for determining where wages should be reported.

In a nut shell, localization of work provisions should be applied in the following sequence in order to determine where wages are to be reported:

(1) Is the individual's service localized in this state or some other state?

(2) If his/her service is not localized in any state, does he/she perform some service in the state in which his/her base of operations is located?

(3) If the individual does not perform any service in the state in which his/her base of operations is located, does he/she perform any service in the state from which the service is directed and controlled?

(4) If the individual does not perform any service in the state from which his/her service is directed and controlled, does the individual perform any service in the state in which he/she lives?

For further explanation and examples, UIPL No. 20-04 may be found in its entirety by following the link below:

http://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=1565

Rett Hensley TALX Consultant

Click here for schedule and factor changes for 2009-2010 through 2/15/10.  Check back often for updates. 

If you are interested in getting more current information, along with notification for all legislation that could impact your unemployment tax rate, contact Pete Krieshok at PeteKrieshok@talx.com and ask about our Enhanced Rate Forecasting.  Tell him Tammy sent you.

Tammy Mullin

The Congressional Budget Office (CBO) has issued its budget and economic outlook for fiscal years 2010 through 2020. The report concludes, in part, that unemployment taxes will increase from $38 billion in 2010 to $75 billion by 2013 and continue to rise to $84 billion by 2020.

An employer’s unemployment rate is determined not only on the employer’s individual experience, but on the health of the state’s trust fund balance. As of this date 32 states (including Virgin Islands) have borrowed federal funds in order to pay unemployment benefits. A total of 12 states have borrowed in excess of $1 billion.

New Hampshire is adopting a Shared Work Program to join the other states mentioned in last week's blog Shared Work Programs.  It looks like public opinion is mixed with some worried that it will put pressure on an already over-burdened unemployment fund and others concerned that it is helping employers cheat their workforce. 

In order to qualify for these types of programs, the employer must show that work hours have been reduced, so they aren't really getting free labor as some may think.  Also, when all is said and done, the unemployment charges are charged back to the employer's unemployment account which they pay back eventually through unemployment taxes anyway. 

So, I don't believe employers see this as a way to cheat the system.  If anything, it benefits the employee, who is able to stay employed and will be better off when business turns around.  They can get back to full-time employment more quickly than folks involved in a straight layoff. 

As far as the burden on the unemployment fund goes, it should pretty much even out in the end.  If you have to cut labor in half, whether you do it by laying off full time workers or cutting everyone back to part time, the math should work out the same in the end. 

What do you all think?  Are shared work programs good for the employer, the employee or both?

Tammy Mullin

The following is part of a bulletin going out to our clients.  Since this is such a front of mind topic, I thought I'd post here as well so everyone can get an update.

Situation

With federal Unemployment Insurance (UI) extensions set to expire at the end of this month, the Senate Finance Committee introduced a legislative proposal on February 11, 2010, to reauthorize UI provisions. Included in the HIRE Act (Hiring Incentives to Restore Employment) proposal is a three month extension of federal Emergency Unemployment Compensation (EUC), Federal Additional Compensation (FAC), and federal funding of state Extended Benefits (EB). The estimated cost for these reauthorizations is $22 billion.

In addition, Senate Majority Leader Harry Reid (D-NV), has stated he will bring a smaller version of the Senate Finance Committee bill to the Senate floor on February 22, 2010.

What Employers Need to Know

The UI assistance measures originally implemented under the American Reinvestment and Recovery Act (ARRA) were extended through February 28, 2010, due to reauthorizations signed into law on December 19, 2009. A summary of UI provisions currently in effect are as follows:

Emergency Unemployment Compensation (EUC) – Persons who exhaust their 26 weeks of regular unemployment benefits may establish or augment eligibility for up to four tiers of EUC. The reauthorization does not add any additional weeks of EUC; it simply extends the date an EUC claim may be established. The program continues to be 100% federally funded from Treasury general revenue. The following table illustrates available EUC benefits.

State Extended Benefits (EB) Full Federal Funding – Normally, the funding for state EB is shared – 50% by the states and 50% by the federal government - but was temporarily changed to 100% federal funding under ARRA. The December 2009 reauthorization pushes back the expiration of full federal funding from Treasury general revenue to the end of February 2010.

Note: By law, government entities and Indian tribes are not covered under normal federally shared or temporary full funding of state EB, and will liable for any EB paid to their unemployed workers.

Federal Additional Compensation (FAC) – A $25 supplement continues to be added to all weekly UI benefits paid, be they regular, EUC or EB. The financing of FAC will continue to be 100% federally funded from Treasury general revenue.

Next Steps

The HIRE Act proposal will not change any of the core UI elements noted above. It will simply push back the expiration date to May 31, 2010.

Tammy Mullin

Shared Work Programs are voluntary employer programs intended to provide a practical and mutually beneficial alternative to layoffs when business declines. These plans enable companies to keep their skilled workforce intact, and eliminate costs associated with recruiting, hiring and training new employees.  Participating workers are able to avoid hardships associated with total unemployment.  Both are able to quickly return to full operational status, once economic conditions rebound.

In basic terms, the hours of all workers participating in an approved Shared Work Program are reduced, but lost wages are then supplemented by partial unemployment insurance (UI) benefits.  Participating workers are not subject to normal unemployment requirements regarding availability and work search; however, they must be available for their scheduled work week.

Employers interested in participating in a Shared Work Program must apply for plan approval with the state unemployment insurance agency.  Once formally approved, an employer will need to supply weekly or bi-weekly certification information on each participating worker to the agency.

Each state agency’s plan will specify:

·         Plan duration (generally 6 months to a year)

·         Range of reduced hours allowed (normally10%-40%)

·         Number of partial UI benefit weeks allowed (usually 26 or 52 weeks)

·         Amount of weekly UI benefits payable

The states listed below offer Shared Work Programs.  Details can be found on the unemployment agency websites as follows:

Tammy Mullin

We know that all states handle their own unemployment insurance programs and have their own rules and regulations regarding unemployment in a variety of categories including how much they pay for weekly benefits and who qualifies for unemployment.  But, did you ever wonder how all those differences combine to determine what it costs an employer to do business in each state from an unemployment perspective? 

Well, below is the maximum amount you could have paid in 2009 per employee in your state if you were max rated in descending order from most expensive to least expensive. 

Tammy Mullin

HR Service Matters

By: Mike Smith

Well maybe you guessed it, but I bought Seth Godin’s book; Linchpin (see my 1/26 blog).  The book’s main premise as I see it is that a new and important workplace component (the linchpin) has arrived.  The linchpins are the people that invent, lead, connect with others and generally make things happen.  While the book is intended to help the individual learn how to be a linchpin and thus become indispensable, I think we all want to cultivate these folks and have many linchpins in our organizations (and expectantly on our individual team).

As I quickly thumbed through my new read, I noticed that in one chapter Seth writes about “The Culture of Connection.”   Here I saw another insight for HR services.  Linchpins need to connect to succeed.  I believe HR can and should provide the services to help their linchpins connect inside and outside the organization.  Seth speaks about job satisfaction and offers the proposition that the key distinction between places to work is really the perceived connection between the employee and coworkers.

We have all seen the excitement in the marketplace about “we’ve got an app for that.”  Employees live in that world and I’ll bet the linchpins thrive in it.  We would do well to create an environment that enables collaboration and connecting tools for our linchpins.  I believe that getting some visibility for the people who are making a difference in our organizations will go a long way to building linchpins and keeping them too.  Do you have an app for that?

Here is a more detailed review of Linchpin if you want to know more about its content.

http://www.ratracetrap.com/the-rat-race-trap/linchpin-a-review.html