July 15, 2021
Colorado continues to relieve employer accounts of regular COVID-19 UI benefits, 2022 SUI tax rates and wage base expected to increase
The Colorado Department of Labor & Employment (CDLE) again confirmed that employers' state unemployment insurance (SUI) tax accounts will not be charged with regular unemployment insurance (UI) benefits that were paid to claimants in connection with COVID-19. Colorado Governor Jared Polis ordered in March 2020 that regular COVID-19 UI benefits not be charged against employers' UI tax accounts. (Colorado employer update newsletter, June 2021; Executive Orders 2020-012 and 2020-100, extended most recently by Executive Order 2021-118 on June 25, 2021.)
UI claims processing backlog continues
Due to the overwhelming volume of claims filed since the pandemic began, there remains a backlog of UI benefit claims not yet been processed by the CDLE. Consequently, in the middle or end of July 2021 the CDLE will issue an appealable decision to both employers and claimants on all outstanding claims that will ultimately relieve employer tax accounts of the UI benefit charges.
Employers are asked to keep in mind that any UI benefit claim they choose to appeal will go through the normal process, and a claimant could be found entitled to benefits that would then be charged their SUI tax accounts. This is a change from the CDLE's previous request that employers not protest benefit charge statements and tax rate notices until after the Department was current on the removal of COVID-19 UI benefit charges from employer accounts. (EY Tax Alert 2021-1090, 6-1-2021.)
2021 second-quarter benefit statements may be delayed
The CDLE also announced that, just as occurred for the 2021 first quarter, the issuance of the second-quarter 2021 UI benefit charge statements will be delayed (until the middle or end of August 2021) due to adjustments being made to benefits charged to employer accounts. Employers are encouraged to contact the CDLE's Employer Services Unit with any questions about their account at either +1 303 318 9100 or +1 800 480 8299, or by email to firstname.lastname@example.org.
SUI tax rates expected to increase in 2022
All adjustments to UI benefits charged to employer accounts will be made in time to accurately calculate SUI tax rates for calendar year 2022. The CDLE reiterates that although these adjustments to employer accounts are expected to positively impact SUI rates, the SUI tax rate schedule is expected to move to the highest of seven rate columns as a result of the impact COVID-19 claims have had on the state's UI trust fund balance.
2021 SUI tax rates increased
The Colorado 2021 SUI tax rates increased to a range of 0.71% to 9.64% on the second highest of seven rate schedules, up from0.58% to 7.4%on the third lowest of the seven rate schedules for 2020. The 2021SUI tax rates continue to consist solely of the base tax rates found in Colorado unemploymentlaw(under the column heading "Reserve Ratio .000-.004").Due to legislation enacted earlier this year (SB 20-207), there were no surcharges, fund-building surtaxes or additional rates added to the 2021 SUI base tax rate.
2022 SUI wage base to increase
SB 20-207 also held the SUI taxable wage baseat$13,600 for calendar year 2021 but will then incrementally increase it each year until it reaches $30,600 in 2026. Thereafter the taxable wage base will be adjusted by changes in the annual average weekly wage.
The 2022 SUI taxable wage base will be $17,000.
Counterbalancing the increase in SUI taxable wage base, the law requires that employers not be assessed a solvency surcharge for calendar years 2021–2022, even if the state UI trust fund balance falls low enough to warrant this move. It is expected that a surcharge will be necessary for calendar year 2023. (Legislative council staff June 2021 forecast, pages 34-35.)
Employers should report job refusals
Employers should report employees who refuse to return to work when notified that employment is available. Except under very limited circumstances, claimants who have been recalled to work and refuse to return may be found to be ineligible for UI benefits.
Beginning February 1, 2021, claimants must resume work-search activities in order to be considered eligible for UI benefits.
Ernst & Young LLP insights
Colorado's UI trust fund became insolvent in August 2020 and the state began to borrow from the federal government to continue to pay UI benefits. According to the federal Treasury Direct website, as of July 15, 2021, Colorado has a federal UI loan balance of $1,014,167,918.51.
EY Payroll News Flash