A recent executive order signed by Gov. Asa Hutchinson is expected to provide relief for business owners by excluding unemployment claims for the second quarter of 2020 in the calculation of UI tax rates.
According to Executive Order 20-54, signed on Dec. 29, 2020, the state will be suspending the usual method for calculating unemployment contribution rates and reimbursement amounts. Hutchinson called the adjustment “essential to the economic and financial stability” of the state, in the executive order.
Excluding the second quarter of 2020’s regular chargeable benefits is intended to eliminate “significant increases” in unemployment contributions due to the surge in unemployment applications filed in the early period of the COVID-19 pandemic.
“Keeping our businesses open and our economy thriving is a priority as we navigate through this season of uncertainty,” Hutchinson said in a statement. “I signed the executive order to help provide relief to Arkansas employers who have been hit hard during the pandemic and I look forward to working with our legislature to establish a solution to mitigate COVID-19 related charges beyond the second quarter of 2020.”
Under the new order, the Division of Workforce Services will only be including chargeable regular benefits from July 1, 2019 through March 31, 2020 when calculating tax rates. The division will be excluding chargeable regular benefits from April 1 through June 20, 2020.
Nonprofits and “government employing units” will be have a different time table for their tax rate calculations. The Division of Workforce Services will look at these organizations’ chargeable regular benefits dating from Jan. 1, 2020 through March 31, 2020 but will exclude the benefits from April 1 through June 30.
“The second quarter was the highest level of unemployment for Arkansans during the pandemic,” Secretary of Commerce Mike Preston said. “This action avoids a catastrophic increase in UI rates for employers already struggling with the effects of the pandemic. We are grateful that members of the legislature have expressed an interest in making statutory changes in the upcoming session to ensure this relief extends beyond the end of the pandemic.”
The executive order is set to expire on Feb. 27, 2021 unless renewed.
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