Lawmakers propose delay to Unemployment Fund increase

Published: Jan. 14, 2012 at 12:04 AM HST|Updated: Jan. 14, 2012 at 1:52 AM HST
Email This Link
Share on Pinterest
Share on LinkedIn
Nelson Befitel, Pro Service Hawaii
Nelson Befitel, Pro Service Hawaii
Karl Rhoads, State Representative
Karl Rhoads, State Representative
Calvin Say, House Speaker
Calvin Say, House Speaker

By Brooks Baehr - bio | email

HONOLULU (HawaiiNewsNow) – In an effort to improve Hawaii's business climate and create jobs lawmakers will consider delaying a scheduled increase in contributions to the state's Unemployment Trust Fund when the 2012 legislature convenes Wednesday, January 18.

According the state Department of Labor and Industrial Relations the average annual contribution in 2011 per employee was $667. If the required contribution is allowed to increase as scheduled, companies will have to pay an additional $180 to $650 per employee.

"For businesses that are struggling, they would have to make tough decisions. It'll definitely affect bottom line and it could mean delaying on a key hiring decision or it could mean laying-off a person or so," said Nelson Befitel, Chief Compliance Officer with Pro Service Hawaii.

Pro Service Hawaii provides human resource services for about 1,100 local businesses. Befitel said if those businesses can keep the money they would lose should the Unemployment Trust Fund contribution increase, they will be better positioned to hire more employees.

"At the end of the day it affects the bottom line and the bottom line savings will help them increase their job force," Befitel said.

State Representative Karl Rhoads plans to introduce legislation to delay the scheduled increase until the economy improves.

"It will save on average $540 per employee per year for businesses that they would have paid otherwise if we don't change the law," Rhoads told Hawaii News Now.

The Department of Labor and Industrial Relations is wary of delaying the increase.

The unemployment trust fund is running low. It has just $5 million. If the required contribution is increased as scheduled, the fund is projected to grow to a healthier $183-million by the end of the year. But, if the increase is delayed, the fund will grow to just $74 million. And with recent layoffs at Hawaii Medical Center and elsewhere, that fund will need lots money to pay unemployment claims.

Copyright 2012 Hawaii News Now. All rights reserved.