MONTGOMERY, Ala. (WSFA) - Gov. Kay Ivey announced that Alabama is giving $300 million in CARES Act funds to the state’s unemployment trust fund.
The governor’s office said in a release that the funds will be used to offset “shared costs.” Those are costs equally distributed to all tax-paying employers and can significantly increase their unemployment insurance tax rates.
“Since the $1.9 billion in CARES Act funds were allocated to Alabama, I have worked to get those funds into the hands of those Alabamians who need it,” Ivey said. “My Administration anticipated shifting in the allocation of this money, and we will continue evaluating our options as we move forward. As we are nearing a place where we must devote these funds to ensure that we protect our businesses, especially our small businesses, we acted on this so as to not create a burden for our employers that could result in business closures and layoffs of hard-working Alabamians.”
“I agree with Governor Ivey that this is a necessary allocation of CARES Act funds in order to mitigate the impact of increased taxes on Alabama’s businesses,” said Alabama Department of Labor Secretary Fitzgerald Washington. “Without this infusion, employers could be facing an unemployment insurance tax increase of more than 500%, which could very well force many businesses to close their doors forever, resulting in even more job losses in Alabama.”
The governor’s office said that based on preliminary calculations, without the transfer of the funds, unemployment insurance tax rates for employers would increase by 508 percent. That would represent a rise in shared cost tax rate.
When adding the $300 million, the increase would be reduced to 200 percent.
On Oct. 1, the Alabama Department of Labor will reinstate temporarily waived employer costs connected to COVID-19 related claims.
“Alabama, like nearly every other state in the nation, waived employer costs associated with COVID-19 related claims at the beginning of the pandemic,” said Washington. “This was a needed adjustment in order to ease the burden on employers facing unexpected mass layoffs and industry shutdowns. Now, as employment is rising, and nearly all businesses are open, we will no longer waive those costs.”
The waiting week, which refers to the holding of the first compensable week of unemployment benefits, and the job search requirement, will continue to be waived through the end of the year.