Governor Ralph Northam announced on Monday that he is making temporary changes to the Commonwealth’s Unemployment Insurance (UI) program.
The Governor issued an Executive Order that requires the Virginia Employment Commission (VEC) to protect businesses from the UI experience rating tax by not penalizing them for lay-offs that occurred during the pandemic.
Next year, businesses would have been facing a payroll tax penalty for each employee that was laid-off this year. However, this new order will protect employers if the employee was laid off between April and June.
The Governor’s Executive Order says that the United States Department of Labor’s Employment and Training Administration issued federal guidance letters outlining the broad, emergency flexibility that states have in order to provide temporary relief to employees and employers that were directly impacted by the pandemic. The temporary change will protect Virginia businesses from having to pay an additional $200 million to replenish the Unemployment Insurance Trust Fund, according to Northam’s office.
The Governor also directed the VEC to begin automatically distributing UI benefits to unemployed Virginians who have been held in the agency’s determination process. According to recent reports, the agency is experiencing a backlog of five months.
“The Virginia Employment Commission remains focused on providing relief for Virginia businesses and workers during these unprecedented times,” said VEC Commissioner Ellen Marie Hess. “These actions will ease the burdens on families and businesses and help our economy grow.”
Northam’s office says that Virginia’s unemployment system has been “severely strained throughout 2020.” He continued to say that due to “low unemployment over the past several years, the system simply was not equipped to handle the surge in unemployment claims that were received due to the pandemic.”
Approximately 1.4 million people have filed for unemployment benefits this year, more than 10 times the number of claims that were filed in 2019, which has left the Unemployment Insurance Trust depleted, according to the Governor’s office.
“Since the start of this pandemic, the Commonwealth has distributed more than $9.7 billion in benefits to hundreds of thousands of Virginians, helping them get through these hard times,” said Governor Northam. “I am proud of what the Virginia Employment Commission has been able to accomplish, but there is still unprecedented need. In the face of federal inaction, these changes will put more of our unemployment insurance funding into the hands of unemployed workers and small business owners who desperately need it.”
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