November 22, 2021
Kansas makes many changes to SUI law, including a revamp of employer tax rate schedules
Effective for tax year 2022, Kansas legislation (HB 2196) replaces the previous employer state unemployment insurance (SUI) tax rate schedules with 13 new rate schedules geared toward restoring and maintaining unemployment insurance (UI) trust fund solvency.
The law also requires the state to deposit $250 million in federal COVID-19 relief funds into the UI trust fund by July 15, 2021 and June 15, 2022 to lessen the impact of COVID-19 UI benefits on future SUI tax rates. The law stipulates that failure to make these required federal transfers will result in a SUI tax rate schedule of new Standard Rate Schedule 7, with SUI tax rates ranging from 0.2% to 7.6% with no applicable solvency credit or adjustment.
Employers will be held harmless and not charged for fraudulent UI benefits
Contributing employers, rated governmental employers and reimbursing employers will be held harmless for, and will not be required to reimburse the state for any UI benefits paid that are identified by the employer and determined by the Department to be a fraudulent or improper payment.
For the period of March 15, 2020, through December 31, 2022, the time limits are suspended for disputing and appealing UI benefit fraud or improper payments to the Department.
State shared work program expanded
Under the law, the state's shared work program is renamed "short-term compensation program" and the program is expanded by allowing employers to apply for short-term compensation when there is a reduction in workforce of 10% to 50% (formerly 20% to 40%).
Once federal COVID-19 relief is no longer in effect, a negative-balanced employer application to participate in the short-term compensation program may only be approved if the employer's most recently calculated reserve ratio has improved from the previous year's reserve ratio.
While receiving short-term compensation, an employee is not required to meet work availability or work search requirements but must be available to work during the employee's normal work week.
Under legislation enacted during the Kansas special session 2020 (HB 2016), the provision of UI law that prohibited negative-balanced employers from participating in shared work plans was suspended, provided the prohibition did not adversely affect the state's qualification for federal reimbursement of shared work UI benefits during the COVID-19 pandemic.(EY Tax Alerts 2020-2087, 8-17-2020 and 2021-0230, 2-1-2021.)
Department must develop procedures for employers to report job refusals
The law requires the Department to develop procedures enabling employers to report workers' refusals to return to work or accept an offer of employment. Upon receipt of such a notification, the Department must determine if the offered employment (1) is suitable and comparable to the claimant's recent employment; (2) is comparable to the claimant's education level and work experience; and (3) would provide wages totaling at least the amount of the claimant's maximum weekly UI benefits.
Employers currently report job refusals on Kansas Form K-BEN 3118.
Modernization project provided for under the new law
HB 2196 creates a modernization and improvement council that will examine the current UI compensation system and recommend changes to enhance, repair or replace the online system used by claimants to file and receive, and by employers to respond to, a UI benefit claim, and for employers to file and pay SUI taxes.
The council will also be required to audit the current system for instances of improper and fraudulent payment of UI benefits made from March 15, 2020, through March 31, 2022.
The council will be dissolved as of the end of three years from its first meeting.
Thresholds for receiving UI benefits amended
The law raises the minimum threshold for receiving a maximum of 20 weeks of UI benefits from a three-month seasonally adjusted average unemployment rate of 4.5% to a rate of 5.0% for weeks beginning September 5, 2021.
The law keeps regular UI benefits at 26 weeks through September 5, 2021. (Governor Laura Kelly's news release, 4-26-2021.)
2021 SUI tax rates increased
The Kansas 2021 SUI tax rates range from 0.2% to 7.6%, up from 0.0% to 7.1% for 2020. New construction employers continue to pay at 6.0% and all other new employers pay at 2.7%.(Kansas Department of Labor website.)
The SUI taxable wage base for 2021 continues at $14,000.
Under HB 2016, for calendar year 2021, Kansas SUI tax rates for experience-rated employers were based on the former standard rate schedule under Kansas UI law. No additional fund-building solvency adjustment applies to employers' 2021 UI tax rates.(EY Tax Alert 2020-2087, 8-17-2020.)
HB 2016 also provided that contributory employers are not being charged for UI benefits attributable directly to COVID-19.
For more information on the changes made to UI law under HB 2196, see the summary.
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