Reforms In State Budget Could Save WNY Businesses $60 Million

Unemployment insurance and workers’ compensation reform in the state’s 2013-14 budget could save Western New York businesses more than $60 million.

According to a news release from Gov. Andrew Cuomo’s office, the estimated savings to employers due to unemployment insurance for Western New York will be $30 million. The savings as a result of the workers’ compensation reform to self-insured businesses for Western New York will be $30,340,462.

Heather Briccetti, The Business Council president and chief executive officer, said the reforms proposed by Cuomo and enacted by the state Legislature will provide much needed stability to the system and give businesses a clearer way to manage their unemployment insurance costs.

”It does this by repaying $3.5 billion in federal unemployment insurance debt thereby restoring the state’s Unemployment Insurance Trust Fund to long-term solvency,” Briccetti said. ”This return to solvency decreases the likelihood that the state will need to borrow from federal trust fund in the future, while still providing an increase in benefits to the unemployed. Also, we appreciate the governor’s continued commitment to fix the workers’ compensation system, improve assessment mechanisms and solve the self-insured group trust issues and the board’s commitment to continued regulatory reforms.”

Brian Sampson, Unshackle Upstate executive director, said his organization has advocated for years for the state to enact proactive changes to the unemployment insurance system that would make it affordable, predictable and fair to both employers and labor.

”We now have a plan that will bring balance to the system and drive down costs for employers,” Sampson said. ”Equally as important, those receiving unemployment benefits will now see an increase in their weekly payments. We need more legislation like this that will help our businesses meet the challenges of competing in a global economy by reducing their costs and bringing equity to a government system that has consistently treated them unfairly.”

It is projected statewide there will be $400 million in savings through the unemployment insurance reform. The reform includes stronger anti-fraud measures. Beginning Oct. 1, a claimant who fraudulently collects benefits will be assessed a penalty. The reform aims to increase fairness to businesses by not charging them for the future claims of employees who have been terminated for misconduct or voluntarily resigned.

Last month, Bill Daly, county Industrial Development Agency executive director, said an example of this reform should help employers save money by not having to pay on claims of former employees.

”Let’s say someone has a job for a while and resigns and takes a new job, and right away they get fired. The unemployment insurance would come back on the previous employer based on the length of service. This was a huge expense for businesses,” he said. ”I’ve seen this before when someone leaves us voluntarily and then either quits or gets fired from their new employer. The unemployment insurance cost comes back on the previous employer. They have to pay the unemployment insurance. This has now been eliminated. This is huge reform.”

As part of the reform, the Labor Department will be issuing new work search regulations to help claimants find a job sooner. Those regulations will include the use of new electronic work search tools, establishing a weekly employer contact goal and maintaining supporting documentation for the claimant to track their progress.

Those who have become unemployed and are looking for work will see an increase in their maximum weekly rate from $405 to $420 beginning in October 2014. Additional increases will continue and be indexed to 50 percent of the state’s average weekly wage. The minimum weekly benefit rate will increase from $64 to $100. Rates were last increased in 1999.

Reforms to the workers’ compensation law will cut costs for employers, increase the minimum benefit to workers and overhaul the way the workers’ compensation system is managed. The state will create one method for collecting annual assessments from employers, thereby saving self-insured employers an estimated $500 million. This change will eliminate an overly complicated and bureaucratic system that was not only expensive for the state but also for employers, the release said. The new system aims to achieve administrative efficiencies and provide predictability to employers.

State Sen. Catharine Young, R-C-I-Olean, said last month in a news release that these initiatives will help small businesses grow more jobs.

”Thousands of small businesses will benefit from a tax reduction, and workers’ compensation and unemployment insurance reforms,” she said. ”We (the state Senate) also successfully pushed to eliminate the 18-a tax on utility bills over the next three years to reduce costs for employers and consumers.”