Businesses in New Jersey will begin paying more for unemployment insurance in Fiscal Year 2022.
In total, companies will have to pay an approximate additional $252 million (and potentially billions more over three years) as the state begins the process of replenishing its unemployment insurance fund — which has made more than $28 billion in payments since the start of the pandemic.
Read more from ROI-NJ:
Those are big numbers.
The question every business owner is asking is this: How much more will I have to pay?
The answer is not simple. It comes on a case-by-case basis.
The increase will not be based solely on the number of employees a company has, but also on how often the company has accessed the system in the past.
Companies that have a solid history of not laying off workers (think businesses with a stable business cycle) will fare better than those with a more cyclical business model (think businesses that need more employees during the summer than other months).
Figuring your unemployment insurance tax comes from two factors:
- The column the state uses. States can be anywhere from Column A (the best) to Column E+10% (the worst). New Jersey had improved to Column B (pre-pandemic), but will now begin a three-year cycle where it will go down one column each year (this was done to gradually introduce the increase). New Jersey will move to Column C, then D, then E in the next three fiscal years.
- The row your company is in: Each column has different rows, depending on how often your company accesses the system. It’s sometimes called the experience rating. Because of this, more stable companies pay less — because they used the UI fund less.
The (potential) good news for New Jersey employers: COVID-related furloughs or layoffs will not impact your row, thanks to a law passed by the Legislature. Wherever you were before the pandemic (good or bad) is where you stay.
The (potential) bad news for New Jersey employers: The success or struggles your company has had during the pandemic will not impact your row. Companies that have done poorly due to the pandemic will not get a better row. And companies that have done well will not have to pay more.
Here’s a chart that attempts to show the increase by column.