NEW JERSEY – To continue supporting our small businesses impacted by the COVID-19 pandemic, Governor Phil Murphy Monday signed A-4853/S-3011 to reduce businesses’ UI contribution rate for a period of time.
“COVID-19 continues to pose economic challenges to businesses across the state,” Murphy said. “Today’s bill signing will alleviate the financial burdens many businesses are facing and help them get back on their feet during this difficult time.”
This legislation will reduce the amount of an employer’s unemployment taxes through Fiscal Year 2023. Additionally, the bill will permit nonprofit and governmental employers that elect to make UI payments equal to the full amount of benefits paid to individuals attributable to service in the employ of the nonprofit or governmental employer to reduce their UI benefit payments by fifty percent for the duration of the public health emergency.
The bill will result in cost savings to State entities, public institutions of higher education, local governments, and school districts during the pandemic. The short-term savings will be made possible by federal unemployment insurance advances. The recently enacted federal stimulus package extended interest free borrowing of these loans through March 14, 2021. As of December 17, 2020, 20 states and the U.S. Virgin Islands have availed themselves of these loans.
“The contributions New Jersey employers have made to our Unemployment Trust Fund have helped keep a record number of workers afloat during this pandemic,” Labor Commissioner Robert Asaro-Angelo said. “This new law will help reduce further hardship on employers, while protecting the vital lifeline of unemployment for the future.”
“A similar phase-in payroll tax measure was utilized after the financial crisis of 2007-2009,” said Michael Egenton, Executive Vice President of Government Relations for the New Jersey State Chamber of Commerce. “This legislation will provide predictability and certainty to employers, especially during these challenging economic times due to the pandemic. Rather than move businesses into the most expensive of six columns to replenish the unemployment insurance fund, the bill will shift them one column over instead of five this July. Additionally, this bill prevents a rate increase for employers who had to carry out layoffs through no fault of their own. We commend the Governor, Senate President Sweeney, Assembly Speaker Coughlin, and the sponsors – Senator Madden and Assembly Majority Leader Greenwald – for their support in making sure our employers do not experience “sticker shock” as we all work towards replenishing the UI fund.”
“NJBIA thanks Governor Murphy and the bipartisan supporters of this important legislation,” said NJBIA President and CEO Michele Siekerka. “Without it, New Jersey business owners would be looking at a massive payroll tax increase this summer, effectively penalizing struggling employers who were forced into workforce reductions beyond their control. Spreading out this increase over three years makes this increase more palatable and helps give our businesses a fighting chance.”