In 2020, the large number of layoffs and furloughs caused by the pandemic led to an excessive number of unemployment claims in New Jersey. That, in turn, depleted the state’s Unemployment Trust Fund and forced the state to borrow funds from the federal government to continue paying benefits. When the state fund becomes insolvent it triggers an automatic increase in the per-employee UI tax for employers. The Office of Legislative Services estimated that the unemployment payroll tax for employers would rise by $919 million in 2021. Separately, individual employers can also see higher rates tied to the number of people they lay off or let go, known as their experience rating.
NFIB has been advocating for our members by encouraging lawmakers in Trenton to prevent or limit these tax increases because small businesses are not to blame for the government-mandated shutdowns and restrictions that led to high unemployment. In an op-ed last fall, NFIB’s New Jersey State Director Eileen Kean called for the Governor to dedicate CARES Act to rebuild the UI Trust fund instead of raising employer payroll taxes. While the Governor did not take that action, he has just signed a bill that would slow the UI tax increases. The legislation, A4853 / S3011 reduces the amount of increases in employer unemployment taxes through Fiscal Year 2023.
Governor Phil Murphy said, “COVID-19 continues to pose economic challenges to businesses across the state,” said Governor Murphy. “Today’s bill signing will alleviate the financial burdens many businesses are facing and help them get back on their feet during this difficult time.”
NFIB will continue to encourage ways that policymakers can reduce this financial burden on our members during the upcoming session.