It appears that for the second year in a row, Connecticut employers will not be able to take advantage of a cost-saving opportunity as a result of inaction by the Connecticut Department of Labor.
In two letters to the Connecticut Department of Labor by the CBIA and the Republican leadership, the details of the state’s failure to submit a waiver application for a Benefit Cost Rate (BCR) add-on have been outlined. The deadline for doing so is July 1 and, according to various reports, the CTDOL has shown no interest in doing so. As a result, Connecticut employers will pay higher federal unemployment taxes for every employee.
What will this mean in practical terms?
As stated by the CBIA, “Filing for the waiver from the BCR add-on will reduce the federal unemployment tax burden faced by Connecticut businesses, which was the highest in the nation last year. Businesses in a state with no federal debt (such as New York, Massachusetts and Rhode Island) pay federal taxes in the amount of $42 per employee. ”
The CBIA goes on to state:
If Connecticut does not apply for the waiver this year, businesses here will pay $196 per employee in federal unemployment taxes. However, if we apply for the waiver and are approved, businesses could instead by $147 per employee.”
The issue is that Connecticut’s Unemployment Compensation Trust Fund remains in debt and, according to the CBIA, requires that we “make the same benefit adjustments made by our neighboring states many years ago.”
Unemployment taxes remain a significant issue for employers in Connecticut and employers should continue to be vigilant on the various issues impacting them this year.