September 1, 2021
Virginia law protects employers from SUI tax increases in 2022 due to COVID-19
Under recently enacted budget legislation (HB 7001), calendar year 2022 state unemployment insurance (SUI) tax rates must be computed without regard to regular unemployment insurance (UI) benefits charged for the period of April 1, 2020 through June 30, 2021. In addition, employer 2022 SUI tax rates (and the pool charge portion of the tax rate) may be lower than, but cannot exceed, the SUI tax rate assigned to individual employers for calendar year 2021. (News release, governor's office.)
HB 7001 also requires that $862 million be deposited in the state's UI trust fund and that $73.6 million be allocated to the Virginia Employment Commission to upgrade its UI computer system. (News release, governor's office.)
Had HB 7001 not been enacted, the Virginia Employment Commission estimated that the 2022 SUI tax rates could have increased four-fold. (Virginia Employment Commission UI trust fund projection 6-2021.)
2021 SUI tax rates increased from 2020
Virginia SUI tax rates had been steadily decreasing over several years, with 2020 tax rates at the lowest possible level, before the COVID-19 pandemic caused a drop in the state's UI trust fund balance.
The Virginia 2021 SUI tax rates range from 0.33% to 6.43%, up from 0.1% to 6.2% for 2020. The new employer rate for 2021 is 2.73% (6.43% for foreign contractors), up from 2.5% for 2020.
The 2021 SUI tax rates included a "pool cost charge" of 0.03% that was added to all employers' SUI tax rates to compensate for benefit charges that cannot be assigned to any specific Virginia employer's account. The 2021 rates also included a "fund building charge" that is added when the trust fund balance does not exceed 50% of solvency.
The average SUI tax rate paid by Virginia employers is 3.15% in 2021, up from the 2020 average of 0.87%.(Virginia Employment Commission UI webinar, 6-2020.)
Under Virginia Governor Ralph Northam's Executive Order 74, issued December 22, 2020, the Commission was ordered to modify the 2021 rate computation to omit the addition of the UI benefits paid for the second quarter (April-June) 2020. In addition, Governor Northam ordered the deposit of $210 million in CARES Act funds to the state's UI trust fund in his special session 2020 budget bill. (News release, governor's office, 12-22-2020; HB 5005, Ch. 56, enacted 11-18-2020; Executive Order 74 and seven subsequent amendments, terminated effective May 28, 2021.)
The Commission issued the 2021 tax rate notices to employers during the first week of January 2021. For more information on SUI taxes, contact the Commission at +1 804 786 4359 or see the Commission's website.
2021 SUI wage base
The SUI taxable wage base remained at $8,000 for 2021.
Work-search requirements reinstated
According to the Commission, beginning the week ending June 5, 2021, claimants were required to resume making an active search for work, and to report contacts made for this purpose when filing their weekly claim for UI benefits. Claimants are required to be able and available for work, and be actively seeking suitable work, being willing to accept any offer of suitable work. Virginia claimants who fail to search for work or to be able and available for work will be considered ineligible for UI benefits for the week in which the failure occurred. (Virginia Employment Commission website, news release.)
Employers should report job refusals to the Commission here.
Ernst & Young LLP insights
Virginia began borrowing from the federal government in October 2020 but was able to repay the federal UI loan balance before December 31, 2021. As of August 25, 2021, the US Department of Treasury shows that Virginia does not have a federal UI loan balance.
EY Payroll News Flash