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Iowa employers are now required to provide employees with notification of the availability of unemployment insurance (UI) benefits at the time of separation from employment or reduction in hours. The Iowa Workforce Development Department provides a standard notice for employers to use to meet this requirement. (Emergency Iowa Administrative Code Section 871-22.19; Iowa Workforce Development news release.)

In addition to providing the form to separating employees, the employer must also send a copy to the Department's Unemployment Insurance Tax Bureau at: 1000 E Grand Ave, Des Moines, IA 50319–0209

To be eligible for federal grants under the Families First Coronavirus Response Act (FFCRA), state workforce agencies must have a provision requiring that employers notify employees at the time of layoff or reduced work of the availability of UI benefits. (U.S. Department of Labor program letter 13-20).

Employers required to submit information when workers refuse to return to suitable work

As we previously reported, the Department announced that businesses are required to report employees who refuse to return to work without good reason, or who quit their jobs, as soon as possible at this website. (Tax Alert 2020-1153)

Iowa employees placed on a temporary layoff related to COVID-19 who refuse to return to work when recalled by their employer will lose UI benefits. Exceptions to the loss of UI benefit rules apply in certain circumstances.

Iowa governor takes steps to avoid higher employer UI taxes due to COVID-19 UI benefit payouts

As we reported, Governor Kim Reynolds announced that she is allocating $490 million of the $1.25 billion of federal funds the state received under Coronavirus Aid, Relief, and Economic Security (CARES) Act towards the state's UI trust fund. This transfer of funds will help to continue to pay UI benefits while also helping to avert an increase in employer UI tax rates in 2021 due to the rise in claims in connection with COVID-19. (Tax Alert 2020-1754)

The governor stated that the $490 million deposit will allow the state to remain at Tax Table 7 for 2021, unchanged from 2019 and 2020. Under Tax Table 7, the range of employer UI rates is from 0.0% to 7.5%, the second lowest allowed by law. The move is expected to save Iowa employers over $400 million in UI taxes.

In her press release, Governor Reynolds stated that she wants to minimize the pandemic's impact on employers so they can focus on growing and reinvesting in Iowa.

Non-charge for COVID-19 UI benefits linked to size of state's UI trust fund

As we previously reported, COVID-19 UI benefits will not be charged to employers' accounts as long as the state's UI trust fund does not fall below $950 million dollars. At that point, the Department will begin charging employers so as to maintain the integrity of the Trust Fund. (Tax Alert 2020-1141)

The governor's decision to transfer federal funds into the state's UI trust fund should hopefully keep individual employer UI experience accounts from being charged with COVID-19 UI benefits. As of the end of July 2020, the UI trust fund balance was $1,127,159,426. (US Treasury Direct website.)

For more information on the Department's response to COVID-19, see the Department's website.

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