Many staffing agencies will face higher unemployment taxes going forward.  With unemployment at its highest levels in recent memory, states are depleting their unemployment reservesat subsequent record levels.  As with many of the employer mandates enacted by the American Recovery and Reinvesment Act of 2009, various new efforts to assist the unemployed have been introduced, potentially causing an increase in both the length of time and number of recipents eligible for unemployment compensation. One such program in particular is the Emergency Unemployment Compensation program which increases the number of weeks an unemployed individual can collect benefits from 20 weeks to 33 weeks as well as the amount of benefits paid during this period will increase by $25 per week.

Since the amount of unemployment taxes paid by each employer is determined by the number of existing unemployment claims awarded against the company, this amount will increase as more personnel qualify for unemployment benefits. It is important to note that as states deplete their unemployment reserves, they are ultimately forced to increase the unemployment taxes charged to the agency to keep the unemployment fund afloat. Many states have even had to borrow money from the federal government at an interest rate of 4.4% to add to their unemployment trust fund.  Because of this borrowing and increase in the number of unemployed, many states have already announced unemployment tax rate hikes for employers in 2010.  The tax rate in Maryland alone will more than TRIPLE and could be higher if you have laid off personnel in the past thee years.  In Idaho, the rate may increase by up to 70% over 2009 rates. Michigan, one of the hardest hit states in the country, will trigger nearly $63 million in new unemployment insurance taxes next year. Many states including Louisiana, Indiana, South Carolina, and Virginia have announced unemployment tax increases--in many cases not only increasing the amount of salary that an employer must pay unemployment insurance on (from the first $8,000 of an employee's salary to the first $12,000 possibly in South Carolina for example), but an increase in the rates as well.  In many states, they are also reducing the maximum weekly unemployment benefit an employee would qualify for as well to help alleviate the drain on the fund.

This news simply illustrates how much it behooves all staffing agencies to actively manage their unemployment claims as well as strive to re-employ staff coming off assignments as quickly as possible.