To offset the cost of three new free-trade agreements, the Trade Adjustment Assistance Extension Act of 2011 (P.L. 112-40) requires states to beef up their unemployment and new-hire reporting laws. Both provisions will affect your payroll operations.
Unemployment credits. If your state unemployment tax bill is less than 5.4%, you can still claim the maximum 5.4% credit on your Form 940. However, there’s a catch: States must conform their unemployment laws to the FUTA provisions of the tax code. Included in the trade act is a provision that requires states to charge benefits to the accounts of employers that have a pattern of failing to timely or adequately respond to requests from the state for information relating to a claim for benefits.
Effective date: This provision becomes effective Oct. 21, 2013.
ONGOING CRACKDOWN: The trade act also allows states to enact harsher measures. Indiana, Louisiana, Vermont, Washington and Wisconsin already penalize employers that don’t adequately explain on claims forms the reason for an employee’s termination. Other states will surely follow.
New-hire reporting. Also included in the trade act is a provision that requires you to report to the state any new hires who are former employees you rehired after they were separated for at least 60 consecutive days.
Effective date: The provision becomes effective April 21, 2012, but states have more time to revise their new-hire reporting laws.