Labor director offers clarification on unemployment benefits issue

To the editor:

The June 22 article, “State to bill businesses to pay back jobless benefits loan,” included several inaccuracies.

It is critical that all employers fully understand the situation at hand, what must be done and why it must be done. That requires an open, transparent and accurate communication to everyone. Some important points of clarification regarding the June 22nd article:

The article states that employers “are being asked to pay interest on a loan they never asked to take that, in turn, makes expansion of their work forces more difficult.” We understand employers who are still struggling after such a lengthy downturn. However, state law requires that Colorado pay 26 weeks of UI benefits.   Secondly, unemployment benefits are an economic stabilizer during periods of unemployment. In May 2011, $176 million was provided in unemployment benefits.   That money flowed back to Colorado businesses, becoming a $281 million boost to the economy.

An employer in the article argues that “the feds have exceeded the unemployment benefits and we’re supposed to pay.”  The fact is, Colorado borrowed to pay the state mandated initial 26 weeks of state benefits. All payments beyond those 26 weeks –— payments that the article insists are costing Colorado businesses — are actually federally funded Emergency Unemployment Compensation (EUC), authorized by Congress.

The article says, “the July bill covers each business’s assessment for the first quarter of this year.” This is not true. The bill is for all interest on loans taken prior to May 2011 earned through September 2011

The article stated that, across the board, even employers who have seen even one claim for unemployment benefits charged to their account will be assessed charges to help pay back the loan from the federal government. This is not true.  Some employers with a claims history may not receive an interest payment assessment.

The article asserts that employers in some states with an outstanding unemployment insurance federal loan as of November 2010 saw an increase in their FUTA tax rates for 2010. “The same thing could happen to many states for 2011, including Colorado.” No, we will not lose the FUTA credit for 2011. However, there is a possibility for a FUTA tax reduction for 2012.

The Department of Labor and Employment worked for more than a year with a group of stakeholders, including representatives from small and large business and business associations, to create HB 1288 that will reform our Unemployment Insurance Trust Fund and help us stave off borrowing in future economic downturns. The legislation, signed into law by Gov. Hickenlooper on May 26, will allow the trust fund to repay its debt and rebuild at a slightly faster rate in order to save employers from higher costs in interest and penalties in the future.

In addition to the statutory reforms from HB 1288, we have lobbied our Congressional delegation on behalf of Colorado employers to waive the loan interest assessment. Gov. Hickenlooper has joined other governors in signing a letter of support to Congress for interest payment relief and we are actively engaged with business associations to lobby for any remedies available to help minimize the impact of the state’s borrowing.

As we rebuild Colorado’s economy, it is critical that Colorado businesses have full and transparent communication about conditions impacting their bottom line. To ensure we are providing that accurate information, please share these important points of clarification with your readers.


Ellen Golombek, executive director

Colorado Department of Labor and Employment