Many Florida businesses will see nearly 200% increases in unemployment taxes in January to replenish the state’s pandemic-stressed Unemployment Compensation Trust Fund.
The 2021 rate schedule, posted by the Florida Department of Revenue (FDOR) in early December, varies by employer, with businesses that laid off workers this year paying the highest rates next year.
Most Florida businesses pay the state’s minimum unemployment tax rate. That 0.1% rate, or $7 per employee, nearly will triple to $20.30 for each worker under the FDOR’s 2021 structure – a $13.30 increase beginning Jan. 1.
The maximum rate, paid by relatively few large businesses with greater propensity for layoffs, will remain 5.4% for the first $7,000 in wages, or $378 per employee.
The FDOR’s pending increases will replenish the state’s Unemployment Compensation Trust Fund, trimmed from $4 billion in March to $1.3 billion after more than 2.2 million jobless Floridians filed unemployment claims by December.
Even with the increase, Florida businesses will pay the nation’s lowest unemployment taxes. Florida businesses will pay on average about $50 per employee, well below the national average of $277.
That’s significantly below the next lowest state, Mississippi, where businesses pay an average of $69 in annual unemployment taxes. Businesses in Massachusetts pay the nation’s highest unemployment rate, an average of $631 per employee.
Florida’s unemployment program is certain to draw scrutiny during the 2021 legislative session after the state’s $77 million CONNECT unemployment website – after years of audits warning it was inadequate – collapsed in March, leaving hundreds of thousands of newly jobless Floridians waiting weeks for checks.
The state since has spent more than $100 million to upgrade the system, which Gov. Ron DeSantis called “the equivalent of throwing a jalopy into the Daytona 500.”
Rep. Anna Eskamani, D-Orlando, pledged in October to introduce a bill proposing to nearly double Florida’s weekly $275 maximum unemployment benefit and 12-week eligibility.
“Florida employers have been benefiting from the lowest unemployment taxes in the country for years and that’s the direct result of corporations shortchanging workers. So we have to remember for context’s sake we’re starting at the bottom,” Eskamani said of the FDOR’s 2021 increases.
No such bill has been prefiled, although a slate of unemployment-related legislation is expected, including measures calling for the Florida Legislature to slash unemployment taxes rather than increase them.
The Florida Chamber of Commerce has told members it will lobby lawmakers to develop a tax cut and credit plan to offset FDOR’s increases and push for COVID-19 liability protections for businesses during the 2021 session.
The Restore Economic Strength through Employment & Tourism (RESET) Task Force recommended in November lawmakers create a tax credit for employers to contribute to the unemployment fund and adopt a bill prohibiting insurers from “penalizing businesses for COVID-related layoffs” in future unemployment tax rates.
Democrats, including Eskamani, said they favor some type of unemployment tax assistance for small businesses, but the pandemic has revealed Florida no longer can subsist with an underfunded unemployment fund.
The Florida Policy Institute, a progressive think tank based in Orlando, recommended Florida raise the unemployment tax rate to “prevent economic catastrophe in times of recession.”
In a widely-published op-ed in October, Florida Center for Fiscal and Economic Policy Director Karen Woodall said without an increase, the fund is “not nearly enough to handle another 10 months of unemployment at the levels the virus caused.”