Recently enacted HB 308 provides flexibility for Alaska workers seeking unemployment insurance (UI) benefits for COVID-19 reasons. The bill waives the waiting-week and work-search requirements and allows for a $75 dependent allowance. Workers may file for UI benefits here. (Governor's press release.)

Employer state UI tax rates affected by payroll fluctuations, not workers' UI benefits

Alaska is the only state that bases its UI tax rates solely on the fluctuation of an employer's gross payroll from quarter to quarter. UI benefit charges and employer contributions do not play a role in the assignment of individual employer UI tax rates.

Employers forced to temporarily reduce or cease business operations due to COVID-19 could see a decline in the gross wages they report to the Alaska Department of Labor and Workforce Development, Employment Security Tax Division, for at least the first and second quarters 2020. This decline in wages could cause an employer's UI tax rate for 2021 to increase.

To avoid a UI tax rate increase, employers should submit "Employer Option Forms" next year to help equalize these declines in payroll. Employers will have until June 30, 2021, to submit this form to potentially reduce the 2020 SUI tax rate, as well as for 2021. From July 1, 2021, only the 2021 SUI tax rate can be changed, but the lower SUI tax rate would be retroactive to January 1, 2021.

Careful consideration should be given to the choice of options, as once an option method is chosen, it is effective for future years and may not be changed without approval. Employers are required to file an option form for every quarter in which their artificial decline situation arises. For more information on this option, go here.

For more information on the Department's response to COVID-19, go here.

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