On January 1, 2009 the unemployment insurance tax will increase from the minimum rate of 0.3 percent on the first $8,500 earned by an employee to a minimum of 0.6 percent. This tax increase is expected to result in an increased payment by companies from the current $25.50 per worker to $51 per worker. The Department of Labor, Licensing and Regulation (DLLR) is beginning to notify employers of the tax hike.

The tax increase is another consequence of the current depressed economic climate. The unemployment insurance tax is the economic resource for the state’s Unemployment Insurance Trust Fund. In recent months the weekly payout of unemployment insurance benefits from the trust fund has increased from $7 million to $12 million. This increased payout of benefits is a result of Maryland’s increased unemployment rate of 4.6 percent, which in turn is now beginning to deplete the trust fund.

State law requires DLLR to review the Unemployment Insurance Trust Fund each September 30. The unemployment insurance tax automatically increases if the balance of the fund falls below a certain level. The fund balance now stands at an estimated at $895.3 million, which is $40 million below the threshold to keep it at its current level.

Thomas Perez, Secretary of DLLR expressed that is necessary to keep the trust fund balance at a healthy level in order to ensure that Maryland does not find itself in a position of insolvency similar to other states, such as California, Ohio, and Michigan. For more information, contact Allyson Black at ablack@mdchamber.org.