Gov. David Ige signs law lowering business payments into fund

Gov. David Ige signed a bill into law Tuesday that’s expected to provide significant relief to businesses faced with steep hikes in how much they have to pay into the state fund that covers unemployment insurance claims.

The employer contribution tax rate was poised to go up to its highest level for many businesses due to the staggering unemployment rates this past year. The bill caps the rate at what is called Schedule D, stopping it from going up to its highest level, Schedule H.

The new law is expected to save employers hundreds of dollars per employee annually. In 2021 the average Schedule H tax would have been $1,800 per employee, per year, according to the governor’s office. The measure reduces this to an average of $850 per employee per year.

In 2022 the average tax under Schedule H was projected to be $1,670 per employee, per year, which will be reduced to $790 per employee per year.

Ige said the law, which will remain in effect for the next two fiscal years, will protect employers from higher tax rates “at a time when they can least afford it,” and help businesses start hiring back workers.

The unemployment rate in Hawaii soared to a high of 23.8% in April as fears of the coronavirus and government-imposed restrictions and lockdowns devastated the economy. Claims for unemployment insurance depleted the state’s trust fund by June, forcing the state to borrow $700 million to cover the shortfalls. The state is expected to have to continue to borrow to shore up the Unemployment Compensation Trust Fund, given the rate cap.

The new law waives the “experience rating” for businesses, which normally determines how much they have to pay the next year. Instead, all businesses will have their rates set at Schedule D, distributing the burden of helping replenish the trust fund.

The new law also provides relief to nonprofits that are not part of the unemployment tax system and have instead opted to pay the full cost of unemployment insurance claims. The federal CARES Act reduced the cost of claims for these businesses by 50%. The new state law will help ease these costs even more by covering 50% of “base period claims,” which are claims that the businesses have to cover for staff they have not laid off, but who left their organization and were subsequently laid off by their new employers.

Anne Perreira-Eustaquio, director of the Department of Labor and Industrial Relations, said during a news conference on the new law that her department is also working to address problems with its overwhelmed call center. The jobless and furloughed workers have grown increasingly frustrated at not being able to get through to agents to assist with claims. Some workers have reported making several hundred unanswered calls a day. Calls are routinely dropped, leaving the jobless with no avenue for getting assistance.

Perreira-Eustaquio said DLIR was receiving about 200,000 calls a day, or roughly 23,000 calls an hour. The department Tuesday installed an automatic call blocker in the call center, reducing the number of calls to about 1,600 an hour.

Perreira-Eustaquio said call center staff would start calling back people who were unable to get through to an agent.

DLIR could not say how many people are currently trying to get assistance with a claim, though the current staffing levels are clearly far from adequate. Perreira- Eustaquio said call center agents assist about 1,600 people a day, but they can’t help with issues such as overpayments or claims that have been held up due to conflicting information from employers.