Legislation would improve fairness and efficiency in unemployment-insurance system - Jan. 23, 2007
07-006
Media contact:
Hilary Young,
360-902-9454
Audio: http://fortress.wa.gov/esd/portal/info/newsroom/audiofiles/audionews
OLYMPIA – The Washington State Employment Security Department is seeking legislative help to make the unemployment-insurance system more equitable and efficient.
The proposed legislation would hold employers more accountable for their own unemployment-insurance costs and avoid shifting costs to other employers. It also would toughen penalties for people who fraudulently claim unemployment benefits.
“We want our unemployment-insurance program to be as fair and efficient as possible in order to make Washington an even better place to do business,” said Employment Security Commissioner Karen Lee. “Both employers and unemployed workers benefit from a stable and consistent system.”
Under the proposal:
· Employers would 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 could be held responsible for unemployment taxes if corporation assets were hidden to avoid the tax bill. Under current law, other employers must cover those costs.
· Penalties for employers who file incorrect or incomplete tax-and-wage reports would be clarified and made more efficient for Employment Security to administer.
· Corporations would be required to provide unemployment coverage for all corporate officers, eliminating inequitable treatment and ensuring that only people who deserve benefits receive them.
The bill also would establish a monetary fine and increase the suspension period for people who try to obtain unemployment benefits fraudulently. This would be in addition to the current requirement to pay back any benefits received.
“Unemployment benefits are intended as a safety net for people who lose their jobs, ,” said Lee. “Tougher penalties will stop people from trying to collect benefits they don’t deserve.”
The final component of Employment Security’s proposal seeks to clarify how professional employer organizations (PEOs) and their clients report employees for unemployment-insurance purposes.
PEOs are businesses that manage human-resource needs, such as health benefits, workers' compensation, payroll and unemployment-insurance, for other companies. Most PEOs report their client companies’ employees under the PEO account, so when a company joins a PEO, it does not maintain its experience-based tax rate. If the company has a history of layoffs, the move allows it to avoid responsibility for unemployment benefits incurred by past employees. Instead, unemployment costs are shifted to other employers.
To solve this, the department proposes that the client be defined as the employer for unemployment-insurance purposes and that its employees be reported under its account, not under the PEO’s account.
The Senate Labor, Commerce, Research & Development Committee held a hearing on the proposal, Senate Bill 5373, on Jan. 22. The House Commerce & Labor Committee has not yet scheduled a hearing on the House version of the legislation, House Bill 1406.
Web Links
Fact sheet on Employment Security’s full legislative package
