CALL TO ACTION: Unemployment Comp Reform

Date: October 18, 2017

Your Legislators Need to Hear from YOU!

The Ohio Legislature is back in full swing this fall after a summer hiatus.  NFIB/Ohio continues to advocate on your behalf on a host of business-related issues including taxes, workers’ compensation, regulatory reform and health insurance.  However, our top legislative priority remains unemployment compensation reform. 

Recently introduced House Bill 382 aims to bring solvency to Ohio’s unemployment compensation system.  NFIB/Ohio appreciates the efforts of sponsor Representative Kirk Schuring to hold interested parties meetings and introduce a bill to begin discussions.  However, NFIB/Ohio believes serious work is needed to House Bill 382.  We need your help to let your State Senator and State Representative know that timely and critical reform is needed and a solution that simply increases the amount of money into the system is not comprehensive reform. 

Ohio borrowed (as did most states) nearly $3 billion in loans from the federal government during the last economic downturn to pay legitimate unemployment compensation claims.  As a result of outstanding loans, Ohio employers were penalized in the form of increased Federal Unemployment Tax (FUTA), paying nearly $1.5 billion in additional taxes.  Ohio employers normally pay a per-employee FUTA of $42.  However, during the height of borrowing, employers were paying $147 per employee. 

Fortunately, the Ohio General Assembly took decisive action to repay Ohio’s loan late last year saving employers over $300 million, leaving only California and the Virgin Islands with remaining federal obligations.  NFIB/Ohio applauds this action to save employers substantial resources.  However, the systemic issues that plague Ohio’s insolvent unemployment compensation system have not been addressed.  Ohio still has a benefit package that is not aligned with the revenue the system receives. 

House Bill 382 makes several changes to Ohio’s unemployment system including: increasing the amount of taxable wage base employers pay from $9,500 to $11,000, instituting a ten percent employee “co-pay,” to be collected, tracked and remitted by employers, freezing of benefit escalator until minimum safe level is achieved or 10 years whichever is shorter, reducing weeks of eligibility from 26 to 24 with an allowance for up to 26 weeks if weather-related lack of work, and granting the Ohio Department of Job and Family Services the authority to seek offset of dependency benefit allowance.   House Bill 382 also changes the terminology to more closely mirror other insurance products which may result in compliance issues with federal law. 

NFIB/Ohio believes this bill significantly adds more revenue while doing little to better align benefits with economic realities.  Of particular concern is the disparate treatment of employees through the proposed co-pay.  Employees will pay a co-pay based on their employer’s experience rating. Thus employees will pay different rates.  This raises federal conformity issues. 

We are also concerned that this proposal will create liability for employers who erroneously withhold or do not withhold a co-pay on behalf of an employee.  Additionally, the large majority of employees will never see a benefit as they will not file for nor collect unemployment compensation.  This provision will benefit employees of industries that frequently utilize the unemployment compensation system to the detriment of those that do not. 

NFIB/Ohio will continue to advocate for unemployment compensation reform that aligns benefits with revenue.  We understand as part of a complete reform package; it is necessary to adjust the taxable wage base for employers appropriately.  NFIB/Ohio recognizes that although the legislature recently temporarily increased the taxable wage base from $9,000 to $9,500, this is the first adjustment in nearly two decades and continues to keep Ohio below the national and regional average.  However, this change must be coupled with benefit reform.  Asking employers to shoulder the entire burden is not prudent nor is it reform. Many other states took measures to create solvency in their unemployment systems to help weather the next economic downturn.  

As part of a package, NFIB/Ohio supports the following: reduction in weeks of eligibility, dependency benefit reform, and a benefit escalator freeze.   We believe a reduction in weeks of eligibility from 26 (one half of one year) to 20 (nearly five months) is prudent.  Ohio’s neighbor to the north, Michigan, undertook this reform and their winters are similar.  To the best of our knowledge, Michigan is not experiencing a shortage of workers because of this change. 

Additionally, the average duration of unemployment benefits in Ohio is 14.5 weeks, well below the proposed 20 weeks.  Ohio must address out dependency allowance.  Ohio is one of 14 or states that even permits an additional allowance for dependents, which has zero relationship to employment, and the only state that administers the way we do.  This creates a logistical challenge for ODJFS, adds to insolvency and is only payable to higher wage earners. 

Finally, we support a freeze in the automatic escalator in benefit payout.  Until Ohio achieves a minimum safe level in the state unemployment compensation trust fund, benefit payouts should not increase because of an increase in the statewide average weekly wage.  These reforms are critical to creating a stable, solvent system. 

We need your help!  Ohio lawmakers must make serious, meaningful reforms before the next economic downturn.  By then it will be too late.  Call or write your legislators with the following points:

  • Reduction in benefit weeks to no more than 20. Other states have done this and Ohioans average only 14.5 weeks on unemployment.
  • Freezing of benefits until we achieve a minimum safe level. Not prudent to continue to pay increased benefits while not solvent.
  • Eliminate dependency provision. No relationship to employment and costly to administer.  Only higher wage earners qualify.
  • Adjustment in taxable wage base to $11,000. (Only if done in conjunction with other reforms)
  • No employee co-pay or assessment, which is difficult for employers to administer, and creates potential liability for employers. The majority of employees will never see the benefit.

You may find your legislators via the following link using your zip code plus four: https://www.legislature.ohio.gov/legislators/find-my-legislators

Please copy NFIB/Ohio Legislative Director Chris Ferruso at [email protected] on any email correspondence. 

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