Recent Changes to New York Unemployment Insurance

As we ring in the New Year, New York State employers should be mindful of significant changes to the New York State Unemployment Insurance Law. As a result of the economic downturn, the New York State Unemployment Insurance Fund became insolvent and New York borrowed $3.5 billion from the federal government to cover increased costs. To repay this loan and to reduce interest payments, New York implemented certain unemployment insurance reforms.

Effective October 1, 2013, the new reform requires employers to timely respond to any New York State Department of Labor (NYSDOL) request for information on claims for unemployment benefits. With limited exception, an employer’s failure to timely or completely respond to the NYSDOL’s request for information will have severe consequences, including the failure to credit the employer’s unemployment insurance account.

Effective January 1, 2014, additional changes go into effect. First, the reform increases employers’ assessments and contributions based on the Federal Unemployment Tax Act (FUTA). Currently, the FUTA tax is assessed on the first $8,500 of each employee’s earnings. As of January 1, 2014, employers’ taxes and contributions will be assessed on the first $10,300 of each employee’s earning and will increase annually thereafter.

The final significant change that takes effect on January 1, 2014 relates to severance payments. Under the reform, if an employee receives severance pay that is greater than the maximum benefit rate, the employee will not be eligible to collect unemployment benefits. However, unemployment benefits will be available if the severance is not paid until 30 days after the employee’s last day of employment.