Gov. Jay Inslee has proposed a bill that is expected to lower unemployment insurance (UI) rates for employers, improve benefits for claimants, and make the UI program more flexible for the COVID-19 pandemic and future emergencies.

The Governor’s proposal, SB 5061, is sponsored by Sen. Karen Keiser (D–Des Moines). The bill makes a variety of changes to the state UI program:

• Reduces the average unemployment tax rate, temporarily reduces the flat social tax rate, suspends the solvency tax until 2025, and expands the period for calculating employer experience rates from 4 to 5 years.
• Encourages small employers to use the Voluntary Contribution Program through incentives like eliminating the 10% surcharge and expanding program eligibility.
• Provides flexibility for COVID-19 response by allowing high-risk individuals (or those with high-risk household members) to voluntarily quit and still receive benefits, and relieves employers of benefits charges for layoffs related to public health emergencies.
• Eliminates shared work benefits charges to employers when fully financed by the federal government.
• It also makes several other changes to benefit claimants, like increasing the UI minimum weekly benefit amount to 20% of the average weekly wage, eliminating lump sum retirement benefit reductions, and waiving the emergency waiting week.
• Authorizes a federal trust fund loan to fund the changes to the UI program without triggering an increase in employer’s federal UI taxes.

The Employment Security Department (ESD) provides a good summary of the bill’s provisions here.

Some cities may benefit from the reductions in UI taxes, relieving some of their tax burden in 2021 and beyond; however, it is unclear how this will impact the cities that are reimbursable employers who effectively pay as they go for unemployment insurance. ESD estimates that the tax cut provisions in the bill will prevent $790 million in employer tax increases in 2021 and prevent a total of about $1.9 billion in tax increases by 2025. On the flip side, the bill may encourage city staff that are high risk and cannot work from home to quit, requiring cities to make up the work through other means.

The House’s companion bill, HB 1098, has yet to be scheduled for a hearing.

Dates to remember

SB 5061 is scheduled for a public hearing in the Senate Labor, Commerce, & Tribal Affairs Committee at 10:30am on Wednesday, January 13.