Dec. 19, 2001 – Starting Jan. 1, most employers will see a reduction in the amount of money they must pay into the Labor Department's Unemployment Trust Fund.
The move, which was mandated by the Legislature, brings the territory into compliance with federal guidelines requiring only that the fund be maintained at a level higher than the amount of money the territory pays to laid-off workers.
Labor Department spokeswoman Rhona Martinez said the Legislature took into account the poor state of the economy as well as the territory's overly healthy Unemployment Trust Fund in revising the contributions schedule downward.
At a Sept. 8 Senate Labor and Veterans Affairs Committee hearing on the proposal, Sen. Norma Pickard- Samuel said local employers had "grossly overpaid" the unemployment insurance tax. "There has been a heavy burden on employers," Martinez said Tuesday. She said the trust fund currently stands at $64 million and is continuing to earn interest.
Starting in January, employers with no history of layoffs — those who qualify for the "minimum rate" — will not have to contribute anything to the fund. Currently they contribute 0.1 percent of $15,900 per year for each employee. The $15,900 will continue to be the base for computing contributions. The rate for new employers will drop to 1 percent of that base from the current 1.5 percent.
Employers who fall behind on their payments will no longer be assessed a delinquency rate. However, any who are delinquent on Jan. 1 will continue to be assessed a 9 percent annual interest rate on the unpaid contributions, and any who file reports late will continue to incur a penalty of $5 a month.
There also will be a change in the contribution rates for employers who have a "negative reserve ratio," the Labor Department term for what results when a company's laid-off workers collect more in benefits than their employer has paid into the Unemployment Trust Fund. That rate had been a flat 5.4 percent. Starting in January, it will vary from nothing to 6 percent, based on the company's record.
For more information, call the Labor Department's Division of Unemployment Insurance Tax Unit at 776-3700 on St. Thomas or 773-1440 on St. Croix.
