Kansas Governor Laura Kelly signed into law H.B. 2570, which makes numerous changes to the state unemployment insurance (SUI) law that directly impacts employers. Following is a summary of the changes.

SUI wage base

Starting in 2026, the current set SUI wage base of $14,000 will be adjusted annually as a percentage of the statewide average annual wage. The percentage will increase progressively through 2030 as follows:

• 25% beginning in calendar year 2026
• 30% beginning in calendar year 2028
• 35% beginning in calendar year 2029
• 40% beginning in calendar year 2030

According to the US Department of Labor, the Kansas statewide average annual wage for 2023 was $60,684. If we assume this is the statewide average wage for 2026, the Kansas SUI wage base would increase from $14,000 to $15,171 ($1,167 x 52 x 25%).

SUI tax rates

Starting in 2025, the current SUI rate schedules will be revised to include a 0% rate group for employers with the highest positive rating and SUI tax rates will be lowered for all positive-rated employers. Starting in 2026, changes will also be made to solvency and credit rate adjustments in conformity with the adjustments to the SUI wage base.

Also starting in 2025, the SUI rate for new employers will decrease from 6% to 5.55% for construction industry employers, and from 2.7% to 1.75% for all other employers.

Effective July 1, 2024, the law provides for an annual calculated debt-forgiveness option for active negative-rated employers with a reserve ratio of -7.150% or less. For such employers, a portion of benefit charges will be conditionally forgiven to bring the employer to a reserve ratio of -7.150%, making the employer eligible for assignment to the lowest SUI rate group for the next three calendar years. A negative-rated employer can forego the debt forgiveness option by submitting a voluntary contribution in an amount sufficient to establish its reserve ratio equal to or greater than -7.149 percent for the following calendar year.

Deadline for making voluntary SUI contributions

Effective with the 2025 rating year, the deadline for employers to make voluntary contributions for the purpose of potentially reducing their SUI tax rate is extended from 30 to 90 days following the date the SUI rate notice for the upcoming year is mailed.

For example, SUI rate notices for 2024 were mailed on November 6, 2023. Under current law, voluntary contributions were required to be made by December 6, 2023, to effect 2024 SUI tax rates. Under the new law, voluntary contributions would have been due no later than February 4, 2024.

Employment Security Interest Assessment Fund

Effective July 1, 2024, the Employment Security Interest Assessment Fund (IAF) surcharge is repealed. The IAF was created in 2011 for employer contributions to pay the interest due on the state's federal unemployment insurance (UI) loan. Unlike some other states, Kansas did not take a federal UI loan following the COVID-19 emergency and thus had no interest repayment obligation.

Mergers and acquisitions

The law requires that upon the completion of a business acquisition involving two employers, a new account will be established, and the SUI tax rate will be determined as of the first day of the next calendar year following the completion of the business acquisition, rather than the first day of the calendar quarter as under prior law.

Electronic filing and payment requirements

Effective for SUI wage reports, returns and payments due after June 30, 2024, all employers with 25 or more employees and all third-party administrators with 25 or more client employees must file and pay electronically.

Employer benefit charge statements

The law changes the timing of benefit charge statements from annual to quarterly for contributing employers and SUI-rated governmental employers. Further, the law repeals the provision that benefit charges of $100 or less are not applied to employer accounts.

Employer audit process

Once the new unemployment compensation information technology system is completed, employers will be permitted to submit reports about job applicants that accept interview appointments but do not participate or notify the employer of their inability to participate in the scheduled interview. Employers will be notified of this reporting option in their quarterly benefit charge statements and annual SUI rate notices.

Ernst & Young LLP insights

Kansas employers should consider updating their SUI tax forecasting models and review with their employment tax advisors changes that may be necessary due to other changes in the state's SUI law.