HONOLULU — A law enacted Friday postpones a scheduled unemployment insurance rate hike that will save business owners across the state about $107 million.
HONOLULU — A law enacted Friday postpones a scheduled unemployment insurance rate hike that will save business owners across the state about $107 million.
Businesses now have a yearlong reprieve from an automatic rate hike that would have gone into effect in March. The new law is retroactive to January 1 and maintains the current rate through the end of the year.
The measure benefits both businesses and employees, said Gov. Neil Abercrombie.
“I’m sure business owners and employees will be very encouraged by this because both elements, if you will, are being addressed,” Abercrombie told about a dozen lawmakers and others who attended the bill signing.
The business community advocated for the delay, which industry representatives said would especially hurt small businesses that are just starting to recover from the economic recession.
The increase would have meant businesses that pay almost $670 per employee might be looking at a cost closer to $1,000 or even higher.
Another section of the law sets unemployment benefits at 75 percent of the average weekly wage, rather than the normal 70 percent. This will also last through the end of 2012.
“Employees are going be guaranteed a significant portion of funding to meet their bills and obligations and responsibilities should an unemployment situation occur,” Abercrombie said.
“The mitigation of burdensome tax increases for Hawaii’s businesses will directly aid in the revitalization of our state’s economy by spurring the creation of new jobs and promoting increased productivity,” the head of Hawaii’s chamber of commerce, Sherry Menor-McNamara, said in a statement.
The unemployment insurance rate is automatically set according to how much the state has in its unemployment compensation reserve fund, which is running on empty after being depleted in December 2010.
The Labor Department cautioned that delaying the increase could mean a bigger hit for businesses in the future if their contributions to the reserve fund don’t begin to replenish it. But those advocating for an extension of the current rate argued an increase could lead to higher unemployment claims, which could be a bigger drain on the reserves.