In-Depth: Unemployment Insurance rates skyrocket for small businesses | WHEC.com

In-Depth: Unemployment Insurance rates skyrocket for small businesses

Jennifer Lewke
Updated: April 27, 2021 06:15 PM
Created: April 27, 2021 05:04 PM

ROCHESTER, N.Y. (WHEC) — The COVID-19 pandemic has already crushed many small businesses across the state but now they’re being hit with another blow by the state.

This time, it’s a big increase in the premium they pay to the state to fund the unemployment system—an antiquated system that, as News10NBC has reported, is collapsing under the stress of the pandemic.

There was a record number of unemployment claims in 2020, the majority of which were legitimately filed by real people who lost their jobs and needed help. But, millions of fraudulent claims were filed too and it’s likely billions of dollars went out the door and into the hands of scammers. Now, there’s nothing left in the pot for those who will truly need benefits moving forward.

Businesses in New York pay into the fund that funds unemployment claims. Normally, the more claims against a business, the higher the rate but in 2020, the Department of Labor was so crushed by claims, it didn’t keep up with the normal checks and balances of verifying them.

“We were told over and over last year don't worry that you can't argue unemployment, you're not going to get your rate changed next year, we understand it's a pandemic just go with the flow,” said Kelly Metras, who owns both Salena's Mexican Restaurant and Nox Restaurant, in Rochester.

Businesses went with the flow as the fund was depleted but now, it’s time to re-fill it and they’re finding out the state isn’t quite keeping its promise. While employers aren’t being dinged more for the number of claims against them last year, in many cases, their minimum base rates are going way up.

“We're hearing from small businesses that didn't lay off a single employee throughout this entire pandemic that are now facing 200%, 300% increases in their unemployment insurance cost, it's just absolutely shameful that New York State is doing this,” said State Sen. George Borrello (R, 57).  

“We personally were at a .6% unemployment rate which is the lowest you can get to my knowledge… we were bumped up to a 2.1% unemployment rate so financially where we’re at right now, that went from $60 a week to $210 a week,” Metras explained.

For businesses trying to get back on their feet, “it just adds to the chaos, it's like COVID is never going to end, it's always something new,” she said.

Senator Borrello said if the Department of Labor did a better job ensuring more of the claims it was paying out were legit, the fund may not be in crisis right now.

“We are hiking their unemployment insurance rates to make up for this mishandling of the unemployment insurance fund and we're going to put it on the backs of every mom and pop business in New York State, every employer that works hard every day and faces the normal challenges of doing business in the most business-unfriendly state in the nation,” he told News10NBC.

In a statement, a spokeswoman for the NYS Department of Labor tells News10NBC, “The administration certainly understands that businesses need support during the ongoing public health crisis, which is why we’ve statutorily capped unemployment insurance increases and modified the program so that employers aren’t charged for workers laid off as a result of the pandemic. Meanwhile, businesses in New York State have access to an estimated $57 billion in federal support through the Paycheck Protection Program, the FY 2022 Budget is providing $1 billion in support for businesses, and the state worked with the private sector to provide a $100 million loan fund for small businesses, among other initiatives, and the state has paid out more than $70 billion in unemployment insurance benefits to more than 4 million claimants — funds that are then spent in communities across the state.”

For more information: Unemployment Insurance Rate Information | Department of Labor (ny.gov)


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