New unemployment tax bills making its way through the legislature.
Join the effort to save Hawaii businesses from astronomical State Unemployment Tax (SUTA) increases in 2021.
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Why should I care?
SUTA tax hikes will harm already struggling businesses
The COVID-19 pandemic has caused unemployment claims to soar in 2020. Consequently, SUTA tax rates could triple per state law come January 2021...unless something is done.
As a leader in the industry, at ProService we are sounding the alarm. As a business community, we need lawmakers to pass a bill in the upcoming legislative sessions to shrink the tax increase and spread the increases over future years. Without a legislative change, employers like you will see a huge increase in tax liability that slows business recovery and creates disincentives to hire employees.
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What is SUTA Tax?
When you become an employer, one of your responsibilities with payroll is withholding certain taxes, such as SUTA tax. The State Unemployment Tax Act (SUTA)* tax is a type of payroll tax that requires employers to pay into a state Trust Fund that funds benefits to employees who lose their jobs to layoffs, furloughs, or reduced work hours. In Hawaii, like many other states, employers are 100% liable for the cost of unemployment insurance.
The Tax Facts:
The Severity of the SUTA Situation
#1.Hawaii's trust fund is depleted
Entering 2020, we had 2.8% unemployment. The trust was healthy. When COVID hit, unemployment rocketed to 23.8% and the trust fund sank into a $1 billion dollar deficit. Like all other states, Hawaii took a federal loan to cover the gap.
#2. SUTA rates will increase
SUTA rates are going to increase no matter what by law. Unemployment claims need to be paid. And the State still needs to pay back Federal loans so the Federal Government does not increase our Federal UI tax rate of 0.6%.
#3. If we don't act, rates could triple
The DOL predicts that rates will increase from Schedule C in 2020 to Schedule H in 2021 (the highest tax rate). An employer paying about $1,159 per year in SUTA taxes for employees making $48,000 or more could pay $2,506 per employee in 2021. That's too steep of an increase.
#4. With action, it can be less costly
During the Great Recession, ProService was successful at working with the State to pass HB2169, which became Act 2 (2010) that lowered mandated SUTA rate increases and spread them out, allowing businesses time to recover. We must work towards a similar goal today.
Our Position:
Employers cannot fairly be held responsible for replenishing Hawaii's reserve
SUTA Bills in Review
There are two sets of bills that are simultaneously making its way through the House and Senate. The Governor’s Administration has proposed Schedule D, F & G for 2021, 2022 and 2023 respectively (HB1005 & SB1159), meanwhile the House has proposed Schedule C, D & E for the same years respectively (HB470 & SB682). Both sets of bills also call for the exclusion of all unemployment claims for 2020 in determining 2021 rates. While this is a step in the right direction, this isn't low enough.
ProService's Stance
At ProService, we strongly advocate for Schedule C for 2021 and 2022, in addition to excluding 2020 unemployment utilization. Furthermore we call on our lawmakers to look for other ways to replenish our state's depleted unemployment reserve and pay down its federal loans (e.g. full or partial federal loan forgiveness, using CARES funds to restock reserves, issuing government bonds etc.)
* For more details, read a message from our CEO, Ben Godsey
ProService's Stance
The Ige Administration has introduced a Bill that proposes Schedule D in 2021, Schedule F in 2022, and Schedule G in 2023. Although it is lower than Schedule H as mandated by current law, we don't believe this is low enough. At ProService, we're believe the Bill should be amended and that the rate schedule should be held at Schedule C for at least 2 years. In addition, our lawmakers need to look for other ways to replenish the trust fund outside of tax hikes on employers. We must spread out the timing and source of repayment.
Can we count on you?
We need your voice.
We believe this steep tax increase cannot be placed on our business community. During the last few months, ProService has worked with the Governor’s administration and lawmakers to advocate for much more moderate SUTA rate increases than those mandated. But we need your help. We need your voice.
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Step 1:
Sound the Alarm
Share this site with your business colleagues. We need the word to get out and let businesses know this is coming!
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Step 2:
Call & Email
Call and email your Representatives & Senators. Tell them this is a problem and you are counting on them to find a solution.(before the next Legislative Session)
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Step 3:
Give Testimony
Businesses can submit testimony of impact during the Legislative Session. Here is a sample testimony to get you started, as well as instructions on how to submit it.Latest News
ProService Hawaii,JAN 20, 2021
Update on preventing SUTA hikes in 2021
Civil Beat, JAN 19, 2021
Hawaii owes the feds $700 million. Businesses may have to pay the tab
Star Advertiser, JAN 10, 2021
Hawaii businesses fear unemployment tax increases will ruin their economic recovery
Pacific Business News, DEC 8, 2020
What Hawaii businesses need to know about unemployment tax in 2021
ProService Hawaii, NOV 15, 2020
State unemployment tax increases in 2021
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About ProService Hawaii
We have taken the lead to attack a large and looming issue that affects every business: significant scheduled increases in State Unemployment Insurance taxes in 2021. Why? We believe it's our job to look ahead and help predict, manage and mitigate cost increases for Hawaii employers as the state's largest and most trusted human resources partner. This is especially true when times are tough.
At ProService, our customers get all the services, tools, and unlimited HR and business advice they need to run their business confidently, all from one partner. If you had a challenging 2020, schedule a free consultation to see how we can make 2021 easier for you.
