Senate Passes Chamber-Supported Legislation to Provide Stability in UI Tax Bills

October 5, 2015

Chamber-supported legislation to make quarterly unemployment insurance (UI) tax bills more predictable for employers was passed by the Senate last week by a 26-9 vote. 

The Senate Republican caucus overcame opposition by the Democratic caucus to tie the change to an increase in the UI benefit window and weekly benefit amount, overcoming those amendments by a 25 to 10 vote. One Republican - Senator Tory Rocca (Sterling Heights) - crossed over in support.    

Under legislation passed in 2011, a UI tax reduction is expected beginning with 3rd quarter wage reports (filed by Oct 25). This means non-delinquent employers will pay UI taxes based on a taxable wage base (TWB) of $9,000, down from $9,500. This is because the 2011 legislation specifies that when the UI Trust Fund (the fund that pays UI claimants) balance reaches $2.5 billion, the TWB would be reduced. The TWB is the annual amount of wages paid by an employer to an employee that are subject to state UI taxes. To determine an employer’s yearly unemployment tax, the wages of each covered worker (up to the TWB) is multiplied by the employer’s annual (experience rated) tax rate. 

Senate Bill 500, sponsored by Sen. Horn (R-Frankenmuth), makes a technical fix to the 2011 law. The legislation would require the Unemployment Insurance Agency (UIA) to determine by June 30 of each year whether the Trust Fund has at least a $2.5 balance and is expected to stay at that level for the succeeding calendar quarter. If it meets this threshold, the TWB would be $9,000 in the next calendar year. It if does not, the TWB would be $9,500. Without this change, employers would see a quarterly fluctuation in their UI rates, creating issues for budgeting and an administrative hassle.   

In practice, SB 500 ensures that MI employers will stay at a $9,000 TWB through the end of 2016, if not beyond. The legislation is expected to be reported to the full Senate within the next few weeks.  

For more information, please contact Wendy Block, Director of Health Policy & Human Resources, at (517) 371-7678 or