Whenever a company lays off a worker, for any reason, it increases the amount this business has to pay in unemployment insurance.
However, now with thousands of workers being laid off by the week, small businesses are concerned with how much they will have to pay when they open back up.
“In 2019, I had one full-time staff person who I was forced to let go and he went on UI. My first quarter payment, which I had to pay two weeks ago ... I had to make the payment of over $4,000, which for a small business shop barely open is very meaningful,” Natasha Amott, owner of Whisk, explained during a joint state Legislative hearing. “That is the amount I paid because one person had been on UI. It was a huge amount of money. So to think about 6 people now being furloughed, I mean it stands to reason it could be well over $10,000 a quarter.”
This experience rating is just one more piece to add on top of everything else, another business owner said.
“We are losing revenue, like incredible amounts of revenue by the day,” Jeff Knauss, CEO, and co-founder of Digital Hyve explained. “We are having to furlough our staff. We’re having to make drastic decisions no business owner wants to make. And on top of that, we have additional concerns ... It’s like plugging a dam every day.”
Handling these increases in unemployment insurance is something that can be fixed at the state level. Senator David Carlucci introduced legislation that would prohibit the inclusion of layoffs during this pandemic to be factored into these rates.
“We know this has just taken on so many situations so many different problems,” Senator Carlucci said. “And our small businesses we have to look around the corner and see, what are the things that will come back that we might not be focused on now, but could be a major problem in the months and years to come.”
Even if businesses hire these employees back once they reopen, this could still tank their experience rating for years to come, costing these small mom and pop shops thousands of dollars.
“That unemployment insurance rate premium that they have to pay will go up and that’s something that could be the difference between our businesses being able to open their doors and allowing them to thrive or put them out of business,” Carlucci continued.
Lawmakers have not held sessions since they passed the budget at the beginning of April. Senator Carlucci is one of the dozens of lawmakers calling on Legislative leaders to resume sessions before the end of May.