NJBIA Supports Legislation Addressing UI Payroll Tax Increase

The New Jersey Business & Industry Associated testified today in support of legislation that aims to avoid a massive unemployment insurance (UI) payroll tax increase in 2021 by way of more manageable payroll tax increases spread out over time when the business climate has improved.

NJBIA Vice President of Government Affairs Christopher Emigholz also told the Senate Labor Committee it was a positive that bill S-3011 would adjust the calculation of business-specific experience ratings – so employers would not be penalized with even higher UI taxes for layoffs beyond their controls during the pandemic.

“Businesses are already down, already facing new taxes and already burdened by new regulations,” Emigholz said. “This payroll tax increase, on top off that, would further devastate our job creators. Additionally, it is important to keep in mind that a payroll tax increase is potentially worse than other taxes because it is based on jobs.

New Jersey businesses are facing a looming $1 billion increase in unemployment payroll taxes in July, 2021 due to the large, and continuing, draw made on the state’s Unemployment Insurance Trust Fund.

“The job losses from the pandemic and Governor Murphy’s shutdown orders have been overwhelming to even a healthy system,” Emigholz said.

Individual companies pay different UI rates, set in a series of tiers and columns, based on their layoff experience and the financial health of the UI trust fund. New Jersey is currently in column B, which represents the second lowest UI tax rate available. If nothing is done, that rate will go right to the maximum, column E+10%.

“Slowing down the increase in the columns that determine payroll tax rates for all employers will help them avoid an enormous tax increase while the economy is still anticipated to be struggling next year. S-3011 spreads a predictable and more manageable phase-in of the required UI tax increase over time instead of all at once.

“This will hopefully help employers recover from the COVID-19 downturn before they have to worry about paying the higher UI rates. The bill also thoughtfully includes a downward rate adjustment if the UI fund naturally recovers faster than expected.”

To see Emigholz’s full, written testimony click here.