The state Senate has approved a one-year freeze to increases in unemployment insurance rating charges.

S.1197 is sponsored by Sen. Roxanne Persaud, D-Brooklyn. A prior version of Persaud’s bill was introduced April 27, 2020, but it was state Sen. George Borrello, R-Sunset Bay, who was the first to broach the idea, introducing S.8179 on April 13, 2020, with several provisions including a freeze on the unemployment insurance rating during the pandemic.

“It could be a huge impact on business of all sizes because they were forced to lay people off because of the pandemic,” Borrello said last April. “Part of my legislation is to hold businesses harmless on unemployment insurance rates. This needs to be done in concert with the federal government to provide proper funding for the unemployment insurance fund so it’s not underfunded. Business owners should not be penalized for something they did not ask for — a massive amount of layoffs. Unemployment insurance is very high to begin with. Should that experience rating now increase their costs exponentially, it could be a make-or-break for a business going forward.”

The bill approved by the Senate this month amends Section 581-a of the state Labor Law to keep any employer whose employees received unemployment insurance when a business closed or cut workers for reasons related to COVID-19 pandemic, or due to a mandatory order of a government entity, from having experience rating charges changed because of the increased amounts of unemployment insurance paid since March 12, 2020.

Unemployment Insurance benefits are primarily financed through the quarterly assessment of taxes on employer payrolls. The tax system operates like an insurance program and is “experience rated.” The employer starts at an initial tax rate, which then afterwards varies based on the amount of benefits charged to the employer’s account (how many past unemployment claims there are and the number of employees). The more charges against the account, the higher the tax rate. The fewer claims against the account, the lower the tax rate.

While Borrello’s bill wasn’t adopted, he did continue advocating for a freeze in unemployment insurance experience ratings since last April. In addition to his bills introduced last April, Borrello also co-sponsored a standalone version of the bill (S.8249) with Senator Pam Helming, R-Geneva, on April 27, 2020. On October 14, he spoke at a Senate hearing on helping small businesses where he noted that the impending increase in unemployment premiums would likely result in an unprecedented doubling of premiums in a state where rates are already among the highest in the nation.

“When it comes to standing up for small businesses in New York state, I will never back down or be silent,” Borrello said Tuesday. “”That is why I was one of the earliest and strongest voices, advocating for the state to protect our small businesses from the devastating and unprecedented increases in unemployment insurance premiums that would hit them in 2021, unless we passed legislation to exempt COVID-related layoffs. The current unemployment insurance system wasn’t designed to adjust for a government-mandated mass economic lockdown like the one we’ve experienced this year. To shield our small employers from an astronomical increase in their rates that was no fault of their own, I’ve been fighting for legislation – since March of last year – that would ‘hold harmless’ small businesses facing this situation.”

The legislation still needs to be approved by the state Assembly before it can be sent to Gov. Andrew Cuomo for approval.