Good news for employers!

In a press conference held on Thursday, December 19, 2013, Governor Neil Abercrombie and the Department of Labor and Industrial Relations ("DLIR") announced that Hawaii employers will see a significant reduction in their Unemployment Insurance ("UI") contribution rates for 2014.  The average savings per employer will be about 35% of their current UI rates (or approximately $300 per employee for the year), although this amount will vary depending on each employer's own UI rating.  For instance, employers with high reserve ratios will see even greater savings, whereas those with negative reserve ratios will see a smaller reduction in their UI rates.

This reduction is due in large part to Hawaii's low unemployment rate of 4.4%, which is currently the fourth lowest in the nation.  As a result of the low unemployment rate, fewer individuals are collecting UI benefits, thereby allowing the state's Unemployment Compensation Trust Fund ("UI Fund") to be replenished.    

During the press conference, the Governor noted that the state's UI Fund currently contains over $300 million dollars, which is the highest it has been since 2009.  The DLIR also explained that it adjusts the UI tax rate for employers each year depending on how much money is in the UI Fund.  The adjustments are made according to a statutorily defined schedule that has eight different levels ? A (the lowest level) through H (the highest level).  In 2013, Hawaii employers were placed on Schedule G.  For 2014, they will be placed on Schedule D.

The DLIR also announced that the taxable wage base for 2014 will be capped at $40,400.

You can view a copy of the press release and a listing of unemployment rates by state here:  DLIR Press Release and Unemployment Rates.  A video of the press conference is available on the Governor's website here:  UI Press Conference.