Industry News
Legislation to improve fairness and efficiency in UI system
February 20, 2007
The Washington Employment Security Department (ESD) is seeking legislative approval of a proposal that would improve equity and efficiency in the unemployment insurance system.
The bills propose the following measures be taken to improve fairness and efficiency in their UI system.
- Holding employers more accountable for their own unemployment-related costs, rather than passing those costs on to other employers. Instead of “socializing” the costs incurred by an employer inaccurately reporting information by spreading it across all employers, the Department proposes to hold individual employers responsible for the costs. From 2003 through 2005 employer errors were responsible for an average of $1.17 million a year for these types of overpayments.
- Holding corporate officers accountable for taxes owed. When a corporation is dissolved, the Department proposes to hold the corporate officers personally liable for unpaid taxes, interest and penalties if it is proved that the officers willfully failed to pay the taxes.
- Establish claimant fines for UI fraud. Even though claimants who fraudulently collect unemployment benefits are responsible for repaying the entire benefit amount, the Department would like to add a monetary fine on top of that amount. They also propose to increase the number of weeks that a claimant is disqualified from receiving benefits as an additional deterrent for repeat offenders.
- Treat all corporate officers the same when it comes to unemployment coverage. Since for-profit corporations can elect unemployment coverage for their corporate officers, some corporations pay less in taxes than is paid out in benefits. The Department proposes to make corporate-officer coverage mandatory, as well as not allowing officers to collect unemployment benefits while the corporation is still in operation.
- Require PEOs to report employees under the clients’ accounts. The Department proposes to clarify that the client company is the employer for unemployment-tax liability, not the PEO. They would also like to see that the experience rating of a client company is not lost when contracting with a PEO.
Other sections of the ESD proposal would close loopholes that open the door to inconsistent treatment of employers and abuse.
Employment Security Commissioner, Karen Lee, said the measures will improve the unemployment system and make Washington an even better place to do business.
For more details on this proposed legislation, visit http://fortress.wa.gov/esd/portal/info/newsroom/2007%20fact%20sheets/LegAgenda%201-10-07.pdf.