SUTA Debate in Senate?

· by Herb Dew

Herb is the CEO of HTI. He founded HTI in 1999 along with John Knight and David Sewell, and remains heavily involved in the organization today.
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Last week bill 478 passed which affects SUTA. It did not include any language that defined relief for companies in tiers 13-20. The plan appears to be that senators will debate and pass an amendment that would lengthen the debt payoff to the federal government and pass that savings alone to companies. Will that happen? I think so, but it remains to be seen.

I suspect that there is a strong majority who would like to see a modification to the bill to lessen the impact on the tax increase. Will jobs be affected? They will. I spoke to a comapny last week that decided to put a new line in a state other than SC. The reason? A gernerally unfavorable tax climate for manufacturing. Their business REQUIRES some annual fluctuation in labor. Perhaps 10-15% a year. They realized that they would likely always stay in tiers 18-20. Its sad. The lines added would have resulted in 100 jobs. Gone now.

I have been asked alot in the last 2 weeks “will they lessen the SUTA tax?” I don’t know. SC has allowed their SUTA system to get so messed up both in cost and process that it will take years to fix it to good health. We have $500 mm in potential claims this year to cover. Plus the debt. And the senate already let about 20% of employers get away with little or no tax paid in order to sell this as a “tax cut”. I have faith though. I do.

After this fight though there are still substantial SUTA questions that need to be addressed:

1. Many companies are discovering fraudulent claims on their bills. The process is cumbersome. How do we lean the process down?
2. How do we design a SUTA system that doesnt promote dependency?
3. Employee contributions. Should employees pay $1-2 a week for their own unemployment?
4. Mandated work. Should people recieving unemployment work for their pay?
5. The employer of record system needs to be reviewed. Look at how some other states do this.

We just have to stay close to this issue. It is a cost element for all businesses that now rivals social security. Keep watching and learning!

Herb Dew