Recently-introduced bills SB 682 and HB 470, if enacted, would offer significant unemployment insurance tax relief for contributory employers.

First, and most significantly, SB 682 and HB 470 would reduce the unemployment insurance tax rate in 2021-2023. The Department of Labor and Industrial Relations (“DLIR”) calculates an employer’s Hawaii unemployment tax rate once a year based on the employer’s reserve ratio and the tax schedule in effect for the year. There are eight possible tax schedules, A-H, with H being the highest. Because of the pervasive unemployment caused by COVID-19, the tax schedule is presently scheduled to be at H for 2021-2023.

SB 682 would reduce the tax schedule to D for 2021, F in 2022, and G in 2023. This legislative adjustment would reduce employer contribution rates as follows:

The average tax impact difference between a schedule H tax rate ($1800/employee) and a schedule D tax rate ($850/employee) would save employers $950/employee this year. Because the unemployment insurance trust fund will be replenished, this relief is temporary. Nonetheless, measures such as these help Hawaii employers deal with the economic challenges caused by COVID-19.

HB 470 proposes to reduce the tax schedule even more than SB 682. Specifically, HB 470 would reduce the tax to schedule C for 2021, D for 2022, and E for 2023.

Second, SB 682 and HB 470 would enable the DLIR to omit the benefits charged in the annual experience rating calculation for 2021 and 2022. This would benefit any employer with one or more employees who utilized unemployment insurance benefits during this time period.

HEC expects SB 682 and HB 470 to move quickly through the legislature this year. Ideally, one of these bills, or some version thereof, will be passed before the DLIR issues each contributory employer their rates in March.

Once SB 682 and HB 470 are scheduled for public hearing, employers may submit written or verbal testimony. The Legislature has prepared an “Abridged Citizens Guide” that offers detailed instructions regarding offering testimony. Further advice for effective testimony is available from the Legislative Reference Bureau.

To submit written testimony, employers can register with the Legislature and submit testimony through the Legislature’s online submission process. To offer oral testimony, employers may review the Legislature’s new guide to submitting oral testimony during the COVID-19 pandemic.

HEC will continue to monitor SB 682 and HB 470 and will notify members when these bills are scheduled for a public hearing.