UI Claims Management

Alaska Employers Already Subject to UI Integrity: Ready or Not!

08.16.2013

Author

Jeff Aleixo

Alaska employers already subject to new UI law

 

If you read this blog regularly you may have noticed we have given significant attention to UI integrity legislation in recent months, as the October 2013 deadline approaches for states to implement new legislation in compliance with the Federal Section 252 mandate in the 2011 Trade Agreement & Adjustment Extension Act (TAAEA), which you can read more about here.

Download our fact sheet about Section 252 implications for employers here.

ETS is deeply invested in promoting employer compliance within the greater HR/Payroll community. The issue of UI integrity, while interpreted differently by the various states, is going to be an ongoing issue for employers as it casts a wide net and establishes a stricter standard for employer compliance related to response quality and timeliness for state workforce agency unemployment claims requests. In certain states, enforcement of UI integrity measures may not be very meaningful, but employers in many states are going to find out the hard way just how costly poor UI processes can be.

Alaska’s UI Integrity Legislation: HB 76

Alaska’s legislation (HB 76) was sponsored by the governor firstly to address state unemployment insurance (SUI) rate increases, and secondarily to bring state UI law into compliance with the federal Section 252 requirement. Thirdly, it also authorizes the filing of UI information via electronic means.

Already in effect as of July 1, HB 76 authorizes the commissioner to suspend (in whole or part) on an annual basis SUI tax increases when the average high cost multiple (calculated by U.S. DOL here) is 0.8 or greater on September 30 of the preceding year, and when the UI trust fund is considered sufficiently solvent. (Alaska employers should be relieved to know their state UI trust fund is doing quite well compared to other states, and as a result they are spared the various surcharges and FUTA reductions that employers in other states are being subjected to).

On the flip side, Alaska employers must pay a fund solvency adjustment surcharge when the reserve rate falls below 3%.

What Alaska employers need to know about the UI integrity portion of HB 76:

  • UI detail can now be filed electronically.
  • Employer’s UI account will be charged when BOTH occur:
    • Overpayment occurs due to employer or employer agent failure to respond timely or adequately to UI agency’s request for detail on UI claim; and
    • Employer or employer agent has established a pattern of such failure
  • “Erroneous payment” is defined as payment that but for the failure of the employer or employer agent with respect to the claim detail request, would not have been made.
  • “Pattern of failure” is defined as repeated and documented failure to respond by employer or employer agent, with consideration given to the number of instances of failure in relation to the total volume of requests. HOWEVER, an employer or employer agent failure to respond may not be deemed a pattern if the number of failures in the year prior to the request is fewer than two, or the percentage of failure is less than 2%, whichever is greater.

Special Consideration to AK Rate of Overpayment:

According to state-specific DOL data for rates of overpayments (visit the page here), Alaska employers were responsible in whole or in part for 7.19% of the state’s UI overpayments in the past three years. That number is higher than the estimated responsibility of employers in many other states, suggesting that employers in Alaska may potentially be more vulnerable to the negative financial impacts of UI integrity legislation. To prepare, consider downloading our UI Integrity Best Practices Tips here.

Here is the most current available UI data for Alaska:

  • Unemployment rate (as of July 2013): 6.3%
  • Estimated rate of UI improper payments (via DOL): 12.74%
  • Taxable wage base in 2013: $36,900
  • Amount of State UI Trust Fund Balance (as of July 2013): $275,938,000
  • Minimum weekly benefit: $56
  • Maximum weekly benefit: $370
  • Minimum tax rate: 1.54%
  • Maximum tax rate: 5.40%
  • Employer assessment provision: No
  • FUTA reduction: No
(Sources: ETS Blog, Alaska Dept. of Labor, U.S. Department of Labor, SUCAP Reports, NASWA, Congressional Research Service.)

Get our two-page tipsheet outlining ETS’ best practices for employers in light of UI Integrity legislation in 2013:

Disclaimer: This article is general in nature and is not intended to replace the guidance of an employment tax expert and/or legal professional with regards to an appropriate course of action in your particular circumstances. Please consult with a professional for appropriate advice in your case. Pursuant to IRS “Circular 230” rules, any information included herewithin is not intended or written to be used for the purpose of avoiding penalties under the federal Internal Revenue Code.
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