New York State’s Unemployment Insurance Funds were Devastates by the Pandemic, but don’t Expect the State’s Budget Windfall to Pay the Cost

By: Todd Oliver

Currently, New York State’s Unemployment Insurance Trust Fund’s Federal loan balance is approximately $9.3 billion dollars while the State’s Unemployment Insurance Administration Fund has a $235 million budget (2021-2022) deficit, both resulting from the extensive social assistance and administrative costs of the pandemic. The big question is how New York State will replenish the unemployment insurance funds. Such shortfalls in the State’s unemployment insurance reserves have never occurred historically and should cause great concern for taxpayers. Fortunately, New York State was the recipient of a $23 billion infusion from the Federal Government’s pandemic relief packages resulting in an unprecedented $7 billion surplus for this year’s State budget. The good fortune of a $7 billion surplus in the new budget proposal, however, is not earmarked to bolster the unemployment insurance reserves. Rather, the proposed budget and administration conventionally relies on New York State companies to repay the unemployment reserve shortfalls through increased UI contribution tax rates and predicted aggressive and arbitrary misclassification audits. While large amounts of the $7 billion budget surplus are arguably well placed to reduce NYS resident property taxes and to fund education and healthcare initiatives at record levels, the proposed budget leaves an unfair burden on New York’s businesses to absorb the unprecedented increased costs for unemployment insurance funding. Logistics companies should therefore be extra diligent in their arms-length contracts and expect the Department of Labor to continue its practices for a one size fits all for workers, attempting to reclassify independent contractor delivery drivers as employees in the gig economy. SCI is here to support the independent contractors and the work they perform.

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