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Quick list of 2011 Changes to Illinois Workers' Compensation Act 

2012 Construction Outlook2012 Construction Outlook

National Legislative Update

From AGC of America

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State of Illinois Legislative Update

From ICIC

Illinois Department of Employemnt Security Agreed Bill

SPRINGFIELD (Nov. 8, 2011) Governor Quinn today announced an agreement that will help

 Illinois businesses push away from the national recession and strengthen the integrity of the

 unemployment insurance program. The bi-partisan effort demonstrates the administration's

 commitment to relieving immediate economic pressures while building the foundation for future

 business growth.

"When it comes down to it, no matter your place on the business-labor wheel, we all want to be

 productive and provide our loved ones with more financial security than what was provided to

 us. That's what this agreement will do," Governor Quinn said. "This legislation clears the path

 for businesses to manage the after-shock of this recession and sets realistic goals on how to move

 forward. It further creates an environment that rewards sound business practices and prudent

 business development and expansion."

"Businesses need a degree of tax certainty to successfully grow in this economy. This agreement

 will provide the tax relief to make that happen while making the Trust Fund solvent," said David

 Vite, president of the Illinois Retail Merchants Association. 

"This agreement recognizes the difficult decisions necessary to prime the pump of this economy,

" said Tim Drea, secretary-treasurer of the Illinois AFL-CIO. "We recognize that the best economic

environment in Illinois occurs when business and labor work together." 

The agreement reduces business taxes that would have been imposed in the form of federal penalties.

It provides a solution to federal borrowing that supported unemployment insurance benefits. And it

increases tools to prevent and recover fraudulent payments which will help restore Unemployment

Insurance Trust Fund solvency.

This solution will save businesses more than $400 million through 2019; provide significant tax

 reductions for businesses with no history of layoffs, which are nearly half of all Illinois

 businesses; and require no payments from the General Revenue Fund, freeing money for other

 state obligations.

Significantly, the legislation will allow the state to garnish federal tax returns of individuals who

 purposefully collect unearned unemployment insurance benefits and establish personal liability

 for individuals who cheat the unemployment insurance program of taxes owed.

"This proposal will help our businesses regain their footing and provide certainty so they can

 appropriately prepare for the future," Illinois Department of Employment Security Director Jay

 Rowell said. "Although the lingering effects of the national recession echo across our country,

Agreed Bill Talking Points

Problem 

• Illinois expected to end 2011 with $2.4 billion in outstanding loans from the federal government

to cover state UI benefits

• Over 4% interest being charged by the federal government – under current law GRF would have

to pay the 2012 interest payment estimated at nearly $82 million (total federal interest liability

 projected at over $240 million).

• In addition, federal penalties that would eventually total $1.2 billion kick in starting in 2012

which will raise taxes on all employers– even those who have not laid off a single employee

 Solution

Business and Labor agreed to a UI trust fund solution:

• Trust Fund solvency at zero in 2018.
• Over $400m in tax savings for employers through 2019.
• Significant reduction in taxes for employers with no history of layoffs – nearly 50% of all Illinois

businesses.

• No additional reductions in benefits through 2019 (Except existing Spring 2011 benefit speed

bumps that reduce benefits to 25 weeks for 2012).

• Significantly reduces the state’s interest liability by utilizing existing but expanded (by $1 billion)

revenue bonding authority – no GRF used to cover interest payments.

• Enhanced Department of Employment Security fiscal integrity provisions and reforms such as:
• Treasury Offset Program (TOP) – DES currently can recoup improper unemployment

 insurance payments from state tax refunds – the TOP program would allow DES to recoup from federal tax returns.

•  Personal Liability – DES would mirror DOR provisions that allow for personal liability when business officers or employees willfully evade paying unemployment insurance taxes.

• Substantial “Rest Stops” inserted into law for 2016 and 2018 with the intent on bringing

business and labor back to negotiations in coming years.

________________________________________________________________________________________________________________________________________________

Unemployment Insurance Overview Major Provisions:

• Wage base.  Under current law, the wage base on which employers must pay UI contributions is $12,740.  This was already scheduled to increase to $13,560 in 2012.  This bill will partly roll that back to $12,900 in 2013, and $12,960 for 2014-2019. 

• Benefit levels.  Under current law, UI benefits are paid by the week for a maximum of 26 weeks.  They cannot be less than $51 per week, cannot be more than 47% of the statewide average weekly wage, and (if the benefit is not the floor number or the ceiling number) shall be 47% of the unemployed person’s prior average weekly wage.  

            Under SB 72, potential benefit cuts could be made to these levels in 2016 and again in 2018.  The statewide weekly wage ceilings and averages could be reduced from 47% to 42.8% in 2016, and from 47% to 42.9% in 2018, and the number of weeks of UI benefits paid by the State could be reduced from 26 weeks to 24 weeks.  Similar cuts are made for supplemental UI benefits paid to unemployed workers on behalf of their nonworking spouses and dependent children.  These benefit cuts may not necessarily be implemented.  They are being called “rest stops” that could cut benefits by an estimated $400 million/year, and are meant to trigger the reconvening of the “agreed bill” process in 2015 and again in 2017.

• Social Security Offset.  Under current law, recipients of Social Security cannot collect full Social Security benefits and UI benefits at the same time; their UI benefits are reduced.  This reduction is called the Social Security “offset.”  Many senior citizens groups oppose this policy, and SB 72 creates a 13-member Social Security Retirement Pay Task Force to study the issue.  

• Experience factors.  The adjusted state experience factor for each of calendar year 2013-2015 is increased by 5% above the adjusted state experience factor.  A similar 6% increase is imposed for each of calendar years 2016 through 2018.  This tax increase upon employers is meant to balance the cut in UI tax burdens borne by employers through the federal FUTA penalties that would have been imposed had the UI trust fund remained insolvent.  This section of the bill does not impose a net new tax burden on employers, but shifts an existing tax burden from one place to another.

“Rest stops”, similar to those imposed upon UI beneficiaries’ labor benefits, are also imposed upon the Illinois employer community in 2016 and 2018.  These “rest stops” also increase Illinois employer experience factors by 19% in each year, and are meant to raise approximately $500 million per year in each of these two years.  As with the labor-benefit “rest stops,” they are meant to trigger the reconvening of the “agreed bill” process in 2015 and again in 2017.

• Employer’s contribution rates.  Employers pay contribution rates based upon their experiences as employers.  All Illinois employers currently pay a contribution rate of at least 0.2%.  For calendar years 2012-2019, the minimum base contribution rate paid by eligible employers that have never laid anyone off, or have rarely laid anyone off, is reduced from 0.2% to 0.0%.  These employers will still have to pay the fund-building-rate portion of their UI tax bill, and a separate contribution rate to help pay off DES debt.

The separate contribution rate will be 0.55%, which is added on to the base contribution rate.  An additional surcharge of 0.3% is also enacted for deposit into the UI clearing account.

• Reporting requirements.  Requires employers to report the date an employee was first hired and began working.

  Passed House:  114-0-0