Connecticut Unemployment Overhaul

Connecticut Unemployment Overhaul

Unemployment benefits are funded by taxes paid into a trust fund by employers in each state. Beginning in 2024, the state of Connecticut is taking steps to improve its unemployment insurance (UI) trust fund solvency which was drained during the COVID-19 pandemic.  The changes are said to:

  • Reduce employer costs
  • Build in predictability for employer fiscal planning
  • Stabilize unemployment insurance (UI) benefit payments to unemployed workers

For the Employer

The most significant change is the increase in the taxable wage base (TWB), starting in January of 2024, from $15,000 (since 1999) to $25,000.  What does this mean? Unemployment tax will now be assessed on the first $25,000 of each employees’ wages verses $15,000 in years prior.  To off-set this increase for employers the charged rates will be reduced by predetermined factors beginning in 2024 through 2027.

The “experience rates” and the “fund solvency rate” will be changing as well, designed to push more of the responsibility for funding employment to the employers that use the unemployment system the most.  Those employers with a favorable experience rate may actually pay less going forward despite the increase in the TWB while those with a less favorable rate will pay a considerable amount more.

An additional win for the employer is that benefits paid to a claimant through the state’s voluntary Shared Work program during periods of high unemployment shall not be charged to experience rated base period employers.

The hope is if CT can accomplish replenishing the trust fund balance the tax rates may be reduced for the future so eventually employers will see lower unemployment taxes.

For the Employee

Changes effecting the employee include:

  • Receipt of severance pay will now result in disqualification from receiving UI benefits for the period of time covered by the payment.
  • Accrued vacation pay at the time of dismissal will no longer disqualify the claimant from receiving UI benefits, if otherwise eligible. However, vacation pay issued to a claimant during a shutdown period will result in a disqualification or reduction in the UI benefits.
  • The minimum weekly UI benefit payment will increase from $15 to $40. However, the minimum benefit will revert to $15 when the federal government provides a fully federally funded supplement to the individual’s weekly benefit amount.
  • The minimum base period earnings requirement has increased from $600 to $1,600. However, the minimum base period earnings requirement will revert to $600 when the federal government provides a fully federally funded supplement to the individual’s weekly benefit amount.
  • The length of certain absences from work for which an employee may be fired and disqualified for benefits has been shortened.

If you have questions regarding the Connecticut unemployment overhaul, we have CPAs who are available and ready to assist you.

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2024-01-03T18:26:05+00:00January 3rd, 2024|Business, Employees, Tax|

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