Governor approves unemployment-insurance reforms - April 20, 2007

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Media contact: Sheryl Hutchison, 360-902-9289

OLYMPIA – Governor Chris Gregoire today signed a new law that will help Washington businesses by improving fairness and accountability in the state’s unemployment-insurance system. 

Senate Bill 5373 makes a number of changes to prevent employers from pushing their unemployment costs onto other businesses, as well as increasing penalties for people who fraudulently claim unemployment benefits.

“This is another great example of how we are improving the business climate in Washington,” said Governor Gregoire.  “Reducing fraud results in more stable tax rates and a better bottom line for businesses.”

SB 5373 is the latest in a series of reforms over the past few years.

“The changes have had a common theme of fairness, stability and efficiency,” said Employment Security Commissioner Karen Lee.  “Businesses want to know that their taxes are being used effectively and that they’re not paying more than they should.  And workers need to know that unemployment insurance will be there when they need it.”

Under the new law:

Employers will be held responsible for unemployment benefits paid to their workers if the benefits were paid due to an error on the employer’s quarterly tax reports.

Officers of a corporation that goes out of business may be held responsible for unemployment taxes if corporation assets were hidden to avoid the tax bill. Under previous law, other employers had to cover those costs.

Employers who file incorrect or incomplete tax-and-wage reports will receive a warning letter for a first offense, and repeated violations within a five-year period will be penalized on a graduated scale.

Corporations are required to provide unemployment coverage for all of their corporate officers, unless an employer notifies Employment Security and its officers that it is opting out.

Professional employer organizations (PEO) must register themselves and their client companies with Employment Security and file separate quarterly reports for each client. Also, each client company will pay unemployment taxes based on its own unemployment experience, rather than sharing a single rate with other clients of the PEO.

People who try to obtain unemployment benefits fraudulently face new monetary fines and increased suspension periods – in addition to the previous requirement to repay any benefits received.

Additional details of the new law are described in the legislative bill report. 

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SB 5373, as adopted