Pennsylvania Unemployment Compensation Reform Law Expected to Result in Savings for Employers

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Last month, Pennsylvania Governor Tom Corbett signed into law an unemployment compensation ("UC") reform bill. The law, considered by many to be largely pro-employer, is designed to restore solvency to the state's unemployment compensation trust fund by 2019. Several of the major provisions of the UC reform law are outlined below.

  • The law authorizes the Commonwealth of Pennsylvania to refinance the trust fund's existing $3.9 billion debt by issuing bonds with a lower interest rate, which is expected to result in significant savings for employers.
  • Employers' UC tax rate will be adjusted by increasing the taxable wage base from $8,000 to $10,000 and decreasing the state adjustment factor from 1.5% to .75% incrementally by 2018.
  • Last year, Act 6 of 2011 froze claimants' weekly maximum benefit at $573 for 2012. The new law extends this maximum benefit freeze through 2019. From 2019 to 2023, this maximum weekly benefit may increase annually, but by no more than 8%.
  • Claimants' partial benefit credit will be reduced from 40% to 30%; in other words, claimants who work part-time while receiving benefits will have their benefits off-set by their earnings where they earn 30% or more of their benefit.
  • Claimants must earn 49.5% of their base year earnings outside of their highest quarter in order to be financially eligible for UC benefits.

Employers should familiarize themselves with the UC reform law and with the changes that will go into effect over the next several years. We will continue to keep you updated on any additional developments in this area.

 

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Tax

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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