State Removes Unemployment Insurance Surcharge

Action will save Kentucky businesses $34 million annually

Gov. Matt Bevin announced today that the Kentucky Education and Workforce Development Cabinet will suspend the current unemployment insurance (UI) surcharge for contributing employers, effective immediately.

The state’s approximately 91,000 employers have been paying a surcharge assessment — currently 0.21 percent of their taxable wage base of $10,200 per employee — since January 1, 2014.

Cabinet officials estimate that this action will save Kentucky companies as much as $34.2 million annually.

“Our administration is committed to making Kentucky the best place in the nation to do business,” said Gov. Bevin. “Whether through sweeping initiatives like Red Tape Reduction or incremental steps like this one, we are doing everything we can to help our employers thrive and grow.”

During the Great Recession, the state’s UI trust fund balance fell far short of the amount required to pay benefits to unemployed individuals.

Beginning in Jan. 2009, Kentucky — along with roughly half of U.S. states — had to borrow from the federal government to pay UI benefits. Eventually, this borrowing (formally referred to as a Title XII advance) reached nearly $1 billion.  

Legislation initiated by former Gov. Steve Beshear’s task force passed the General Assembly in 2010, realigning both benefit levels and assessments on business to help restore the fund to solvency.

In April 2012, the Kentucky General Assembly passed House Bill 495 (now KRS 341.614), establishing a UI surcharge to address approximately $55 million in unpaid interest to the federal government.

“Today is a great day for all employers in the Commonwealth,” said Gov. Bevin. “We have now retired the last of the unemployment debt and we are delighted to remove this additional tax burden from the backs of Kentucky’s job creators. This successful result was made possible by the collaborative efforts of the former administration, members of organized labor and the business community all working together to address this problem.”

“In House Bill 495, legislators allowed for suspension of this assessment based on the positive balance of our trust fund,” said Education and Workforce Development Cabinet Sec. Hal Heiner. “This is good news for all Kentucky employers, large and small.”

Individuals and employers can find full details about UI at Kentucky’s Electronic Workplace for Employment Services — www.KEWES.ky.gov.