Changes to New York Unemployment Insurance Law

By now every employer, employee and individual is aware of the U.S. recession. Although the nation is in recovery, there are still consequences of the protracted recession.  Due to the recession, employer contributions to the New York State Unemployment Insurance Fund have been insufficient to cover the benefits paid out to individuals. As a result, the Unemployment Insurance Fund is grossly underfunded, which has required New York to borrow $3.5 billion from the federal government. In order to repay this loan and avoid significant interest charges, New York has recently enacted a number of “reforms” that are expected to save the state $200 million.

The first reform came into effect in October of 2013, which penalizes employers who are tardy in responding to the New York State Department of Labor’s (DOL) request for information. This change is required under new federal guidelines to state unemployment insurance funds. When an individual files for unemployment benefits, the DOL usually submits a form to the individual’s most recent employer requesting information about the individual. Typically, the employer must return the form within 10 days. Based on the information contained in the form as well as other information obtained by the DOL, a determination is made as to whether the individual is entitled to benefits, as well as the amount of such benefits.

Additionally, if an employer is late in responding to the DOL’s request for information or provides incomplete information, the DOL will no longer credit the employer’s account. That is, even if the DOL or an administrative law judge determines that the individual is not entitled to benefits or has been overpaid, the DOL will not credit the employer’s account; instead, the money will revert back to New York State’s general Unemployment Insurance Fund.

The second significant change concerns those situations where the individual receives severance pay from his or her prior employer. Starting January 1, 2014, if the DOL determines that if an individual receives severance within 30 days after the employment relationship ends and the severance pay is an amount that is greater than the maximum benefit rate, the individuals will not be able to collect unemployment benefits until the severance pay is exhausted. As a result, if an employer is going to give severance to a departing employee, it must now review the timing and amount of the severance as it could prevent the departing employee from collecting unemployment.

As a result of these changes, employers must stay informed in order to ensure adherence to their newest obligations. Similarly, employees should keep up with the newest labor laws to know their rights and protections. If you are an employer or employee who does not understand or has questions concerning the laws that may affect you, contact an experienced employment attorney.

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