Despite an Executive Order stating that employers should not be charged for any unemployment insurance (UI) benefits paid to claimants who were laid off or on a leave of absence due to COVID-19, many employers are reporting that these charges are starting to appear on their accounts. The same goes for previously reported fraudulent identity theft claims. These improper charges should be carefully monitored, as they could impact the business’ 2021 UI tax rate.
Executive Order 2020-76, which remains in effect through at least Aug. 1, 2020, and states: “6.) Any benefit paid to a claimant who is laid off or placed on a leave of absence must not be charged to the account of the employer or employers that otherwise would have been charged but instead must be charged to the Unemployment Insurance Agency’s non-chargeable account. Effective March 25, 2020 at 11:59 pm, the benefits conferred on employers by this section are not available to employers determined to have misclassified workers.”
While COVID-19 claims should be charged to the non-chargeable benefit account (meaning the costs will be socialized amongst all employers), we are learning that this may not necessarily be true in all circumstances. This likely has to do with the unprecedent volume of claims that have been filed since this pandemic began and the complexity of the situation.
We are actively urging the Unemployment Agency to work quickly to resolve this issue in their system. However, it doesn’t appear as if there is a quick or easy fix and there may be some claims/charges that continue to slip through the cracks. This is because not all claims filed in this time period should be approved or non-charged (e.g., they have to separate out charges for discharges, quits, non-COVID claims that should be charged, etc.).
Some estimate it could take 12 months or more for some claims and various problems associated with them to get completely fixed. In the meantime, employers should carefully monitor their UI accounts through the MiWAM system. The best advice is to check second quarter 2020 1770 forms (summary of quarterly charges) and promptly appeal any charges you feel should be non-charged.
Please contact Wendy Block with any questions or feedback at wblock@michamber.com