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Wednesday, April 29, 2020

New York Unemployment Insurance Laws Penalizing Businesses for COVID-19 Layoffs

Businesses of all sizes across New York State have felt the economic impact of the COVID-19 outbreak in the form of decreased business and revenue.  In an attempt to reduce expenses and keep the business viable during these difficult times, many businesses have reluctantly decided to layoff or furlough a large portion of their employees.  Under current New York State laws, however, this decision will have major financial implications for the business that will last long after the COVID-19 health crisis has passed in the form of steep increases to their Unemployment Insurance contributions.

The New York Unemployment Insurance program is an insurance fund that all businesses pay into.  Like most States, the employer’s financial contributions into the program are based on a calculation known as the “experience rating.”  This rating is negatively impacted by the amount of former employees who file unemployment claims and receive unemployment benefits.  Accordingly, businesses that have more former employees filing and receiving unemployment benefits pay contributions at a higher rate than employers that have fewer former employees receiving benefits.  During the current COVID-19 outbreak this means that those employers who are forced to layoff or furlough workers in an attempt to save their business will face steep increases to their Unemployment Insurance contributions for many years after this health crisis is over.  This, in turn, could hamper these businesses from being able to fully resume operations once the State lifts the stay at home restrictions. 

Many other States in the country have recognized the negative implications that their current unemployment insurance laws are having on their businesses and have taken action to address them.  At the time of this post at least sixteen (16) other States have changed their laws in some form to reduce the economic impact on a business if it is forced to layoff or furlough workers during this health crisis.  Most of these States, for example, have changed their laws either through legislation or executive order to provide that an employer’s experience rating will not be negatively affected if it is forced to layoff or furlough employees as a direct result of the COVID-19 outbreak.  Unfortunately, New York is not one of those States and I am personally unaware of any pending legislation in either the New York State Assembly or the Senate.  By failing to address this issue, New York State is in essence penalizing its businesses for something that is completely out of their control.  As a result, New York businesses will need to take into consideration what the long term effect of higher Unemployment Insurance contributions will be on their business when deciding whether layoffs or furloughs are a viable option to get them through this crisis. 

At the Law Office of Steven A. Campanaro we are here to assist businesses of all sizes navigate the constantly changing laws and regulations associated with the COVID-19 outbreak.  Due to high demand, we have recently streamlined our consultation process by implementing the ability to book telephone or video consultations online.  If your business needs legal assistance and would like to schedule a consultation, please click “Contact Us” at the top of our website to make an appointment.

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