ACTION ALERT | Update on Legislation Impacting UI Benefits and Taxes; Employer Engagement Now Focuses on the House

The Senate last week passed S.10, legislation impacting UI benefits and taxes, with amendments.  The bill is now pending review and action in the House Commerce and Economic Development Committee, which could take the legislation up as soon as next week.

Current Provisions and Issues

The bill includes a number of provisions, some of which are positive and some negative.  AIV opposed the bill as passed by the Senate, and will be working to amend it further in the House to address key concerns.

Key provisions of the bill (click here for the bill as passed by the Senate) include:

  • Creates a new, $50 dependent UI benefit for five years following the end of current federal UI bonus payments, currently scheduled this September.
  • Extends expanded COVID-related UI eligibility criteria enacted early last year.
  • Freezes the UI tax schedule and taxable wage base for one year, and directs the Department of Labor to somehow not collect the amount of the one-year delayed tax increase in future years.
  • Extends and modifies criteria for forgiving employer experience charges for certain COVID-related UI claims enacted early last year.

AIV remains opposed to simply adding a dependent benefit on top of Vermont’s already robust UI benefits for five years, particularly in light of the substantial dependent-focused direct payments and tax changes recently enacted by the federal government, and the fact that this would extend a new UI benefit and related costs well beyond the current COVID crisis.

A fair discussion about incorporating a dependent benefit in our UI system can be had, but issues like the reasons why few states have such a benefit, what the appropriate amount would be if we enacted one, and how our existing benefits should be rebalanced to accommodate such a new benefit, must, at the minimum, be the foundations of such a discussion.

In addition, the Department of Labor has raised technical concerns about implementing a new UI benefit provision given their current obsolete and strained technology and resources, and these concerns should be given further consideration.

AIV does support temporarily deferring the pending increase this July in UI taxes driven by COVID’s impact on the UI Trust Fund.  The provision added at the last minute to direct the Department to somehow try to hold employers harmless for that deferral, however, appears unworkable and it sidesteps the more fundamental need to remove the extreme impact that 2020 UI costs will have in automatically inflating future UI taxes to unreasonable and unsupportable levels.

Because UI tax schedules adjust annually based on the level of the UI Trust Fund relative to the most costly year in the last ten years, 2020 will be driving UI taxes and balances through the next ten years.  But because of the extreme and anomalous amount of losses in 2020, the system will end up collecting hundreds of millions of dollars in unneeded reserves – the Fund could exceed $1 billion in the coming years.

Addressing the long term impacts of 2020 on the UI Trust Fund is emerging as an increasingly critical issue for S.10.  Removing 2020 from the calculation of UI taxes going forward is the simplest step toward effectively addressing this problem.  However, S.10 as passed by the Senate only provides for a study and report on proposals to address this issue next year.

AIV and allied organizations will be urging the House to include a direct fix of the 2020 issue in S.10 by removing that year from the Trust Fund calculation.  If it is not actually fixed in S.10, it has become clear that there will be repeated efforts to include significant and unwarranted UI benefit increases in any future bill addressing the issue.

Action Needed

Although serious problems with S.10 remain, employers contacting Senators helped make changes in S.10 during Senate consideration.  Continued employer outreach to Representatives will be critical to resolving the remaining issues with the bill.

Employers are encouraged to contact their Representatives in the House and the members of the House Commerce and Economic Development Committee and urge them to make two key changes to S.10:

  • Include language removing 2020 from the calculation of UI tax schedules. Removing 2020 is clearly the simplest and most effective step toward avoiding unneeded increases in UI taxes.  If S.10 only provides for a study and report, it will needlessly delay this critical fix.
  • Eliminate the new UI dependent benefit and oppose any other arbitrary increase in UI benefits. Vermont’s UI benefits are already robust and our system is one of the most expensive in the country.  If there is interest in a dependent benefit, the issue must be further studied in the context of containing overall UI costs, not simply adding to them.

If you have any questions about S.10, the related UI benefit and tax issues, or other matters, and if you need any assistance in contacting Representatives or discussing any feedback you get, please contact us at

You can identify your Representatives and find their contact information by clicking here.

You can find the members of the House Commerce and Economic Development Committee and their contact information by clicking here.