Mainstreet Daily News
The Center Square – Florida businesses will pay higher unemployment taxes but lower workers’ compensation rates in 2021, a bad news-good news scenario fostered by the COVID-19 pandemic’s economic fallout.
The Florida Department of Revenue (FDOR) will increase the unemployment tax rate in January for the vast majority of the state’s employers, according to a Florida Chamber of Commerce news release.
The maximum rate, paid by relatively few large businesses with a greater propensity for layoffs, will remain 5.4% for the first $7,000 in wages, or $378 per employee, the chamber said.
Most Florida businesses’ unemployment tax rates, however, especially those with a three-year history of no layoffs, are closer to the minimum than the maximum levy.
Businesses that pay the state’s minimum unemployment tax rate – 0.1 percent or $7 per employee – will pay $20.30 for each worker under the FDOR’s 2021 structure, according to the Chamber, which announced the increase without challenge or confirmation from the department.
The FDOR’s pending increases will replenish the state’s Unemployment Compensation Trust Fund, trimmed from $4 billion in March to $1.3 billion after more than 2.12 million jobless Floridians filed unemployment claims totaling $19 billion by November.
According to the Florida Department of Economic Opportunity (FDEO), Florida lost 1.18 million jobs from February to April. By late-November, the FDEO reports, more than half had be regained. Florida has paid 2,119,166 claimants nearly $18.9 billion in state and federal benefits, according to the FDEO.
After being forced to borrow $2.3 billion from the federal government in 2009 to pay unemployment claims during the 2008-09 Great Recession, Republican legislative leaders that same year, at former Gov. Rick Scott’s behest, restricted maximum weekly unemployment payouts to $275, the nation’s fifth-lowest, and reduced the maximum weeks of eligibility from 26 to 12, the nation’s shortest span, to “grow” the state’s unemployment trust fund.
The Restore Economic Strength through Employment & Tourism (RESET) Task Force recommended this week lawmakers create a tax credit for employers to contribute to the unemployment fund and adopt a bill prohibiting insurers from “penalizing businesses for COVID-related layoffs” in future unemployment tax rates.
Meanwhile, Florida workers’ compensation insurance rates will decrease by an average of 6.6% effective Jan. 1, Florida Insurance Commissioner David Altmaier ordered last week.
The decrease is the fourth consecutive year Florida workers’ compensation premiums have declined and is nearly 1 percentage point more than the 5.7% reduction recommended by the National Council on Compensation Insurance (NCCI), which sets rates for the insurance industry.
The 6.6% reduction is justified, Altmaier wrote, because “the workers’ compensation marketplace has reported underwriting profit the last six years due in part to safer workplaces and a long-term shift from manufacturing to service sectors.”