The State of New York has recently enacted several changes to its Unemployment Insurance Law due to the insolvency of the New York Unemployment Insurance Fund. Although designed to increase revenue, the changes will also significantly affect the administration of unemployment claims for New York employers. A summary of the more important changes to the law are discussed below.
Responding to DOL Requests for Information
When a discharged employee applies for unemployment, the New York Department of Labor (“DOL”) usually requests information from the employee’s last employer about the person, such as dates of employment, wage rate and reason for discharge. Employers usually have 10 days to respond to this request. Based on information received from the employer and other information, the DOL makes an initial determination whether the applicant qualifies for benefits. Either the individual or employer can appeal that decision by requesting a hearing before an administrative law judge (“ALJ”). If the employer is the party who appeals, the applicant is usually awarded benefits pending the outcome of the appeal. If the appeal is decided in the employer’s favor and the applicant is deemed ineligible for benefits, the DOL then credits the employer’s account for any overpayment made to the applicant.
However, the requirements for an employer to be credited with an overpayment after an appeal have changed. As a result of the recent changes to the Unemployment Insurance Law, if an employer is now late in responding to the DOL’s information request or provides incomplete information, the DOL will no longer credit an employer’s account for any overpayment where it is determined after an appeal to an ALJ that an overpayment has been made. Instead, any overpayment will be credited to the general Unemployment Insurance Fund. Thus, where an ALJ disqualifies an applicant from receiving benefits, the employer will not be credited for any overpayment made during the pendency of the appeal, if the employer failed to respond to the DOL’s request in a complete and timely manner. This change increases the need for employers to respond to information requests from the DOL in a complete and timely manner to obtain the full benefits of a denial of a claim and avoid charges to their accounts.
Effect of Severance Payments on Benefit Eligibility
Another major change in the Unemployment Insurance Law is that individuals who begin receiving severance pay within 30 days after termination that exceeds the maximum weekly unemployment benefit will not be eligible for unemployment insurance benefits during the severance pay period. Before this change, individuals were generally eligible to simultaneously receive both unemployment benefits and severance pay regardless of when the severance pay started. Employers who offer severance on termination and who wish to preclude employees from receiving unemployment benefits at the same time should ensure that the severance payments begin no later than 30 days after termination.
Increase in Earnings Subject to Unemployment Tax
As of January 1, 2014, the amount of each employee’s earnings subject to the unemployment tax will increase from $8,500 to $10,300. The amount of each employee’s earnings subject to the tax will steadily increase over the next 12 years so that by 2026, the amount of earnings subject to the tax will be $13,000.
Increased Penalties on Benefit Recipients
The recent changes to the Unemployment Insurance Law also affect benefit recipients. An individual improperly awarded unemployment benefits or overpaid benefits has 12 months to repay the overpayment. As a result of the recent changes to the law, a person who fails to make the repayment on time will be assessed a 15 percent monthly penalty on the overpayment or $100, whichever is higher, and the person will forfeit four days of future unemployment benefits for every week he or she was overpaid.