Massachusetts Implements Unemployment Inusrance Rate Freeze Legislation

Rate freeze along with additional reforms will encourage job creation and promote economic growth in the Commonwealth.

Governor Deval Patrick today signed legislation that will provide immediate relief to Massachusetts businesses by freezing employers’ contribution to the Unemployment Insurance (UI) Trust Fund at current levels.

This new law prevents a scheduled rate hike from taking effect, helping to save businesses almost $400 million this year.

“Without this legislation, employer costs were on track to rise by an average of over $300 per employee. That increase was simply unacceptable to us, “said Governor Patrick.”By freezing the rates at current levels, we are providing businesses with the immediate relief they need to invest and grow.

“By partnering with the Legislature, we are able to provide additional resources that will not only help businesses manage during this very critical time, but also focus on job creation and growth in Massachusetts,” said Lieutenant Governor Timothy Murray.

“In this tumultuous economic climate, this was a critical step in order to help bring some immediate relief to businesses,” said Senate President Therese Murray who recently introduced legislation that would take steps to improve business development by streamlining the state’s economic development efforts. “This is part of an overall effort we are working on to help improve the current business climate as we work toward bigger, long-term goals like streamlining economic development efforts and health insurance payment reform.”

“While we remain concerned about those who rely on unemployment insurance to survive, we must also lessen the burden on our businesses, which fund our unemployment system,” said House Speaker Robert A. DeLeo. “This bill has sent a clear message to businesses across the Commonwealth that we are serious about economic growth and job creation in Massachusetts.”

Employer contributions into the UI Trust Fund are tied to the amount of reserves in the trust fund. By law, a scheduled increase was triggered on January 1, 2010 which would have caused an increase in the average contribution per employee of over $300 for 2010. In order to reduce costs for Massachusetts businesses, the Governor and the Legislature agreed to freeze the contribution at a lower rate schedule (Schedule E). This measure will not impact benefit levels or eligibility for persons currently collecting unemployment benefits.

“I thank Governor Patrick and the Legislature for freezing scheduled unemployment insurance rates for 2010. This announcement will afford employers significant savings at a time when many businesses are continuing to struggle through a tough economy. This is the type of action AIM advocates for and will help lead to a strong economic climate in Massachusetts. We look forward to further meaningful discussions of related reforms,” said Rick Lord, President and CEO, Associated Industries of Massachusetts.

“In this economy, this rate freeze is very important as we look to hold employer costs down. Hopefully we can also get to a real reform package which can put us into the mainstream cost wise as compared to other states,” said Jon Hurst, President, Retailers Association of Massachusetts.

“I am pleased that the Legislature and the Governor acted so quickly to prevent UI costs from increasing dramatically this year, and I am optimistic that the Governor’s proposed UI reform will be enacted as well,” said Joanne Goldstein, Secretary of Labor and Workforce Development.

In addition to the rate freeze, Governor Patrick has proposed several other reforms to address the needs of employers of all sizes. Last week, in an address to the Boston Chamber of Commerce, the Governor unveiled a small business jobs incentive plan that provides tax credits for businesses that create new jobs, eases healthcare costs for small businesses and increases the availability of working capital to allow small businesses to expand. In addition, the plan strengthens the Workforce Training Fund, supports the Division of Unemployment Assistance’s anti-fraud measures and includes protections for workers by reducing unfair barriers to eligibility.

Together with the UI rate freeze, these additional measures will help foster job creation and further economic growth throughout the state.