KemLaw

The incoming administration of Governor-elect Ned Lamont faces many stiff challenges – pension funds badly underfunded, budget deficits, and business malaise – to name just a few.

You can add another to the list.

The Connecticut Unemployment Compensation Fund, the fund that pays unemployment benefits, is insolvent.  According to the document given to the Governor-elect by the Department of Labor: “The UI Trust Fund, out of which the UI Benefits are paid, is not solvent. The current system of imbalanced Unemployment Insurance tax benefit payouts is not sustainable,”

And this news comes at a time when experts are beginning to sound alarms about a possible downturn in general economic activity.

There’s currently $609 million in the fund.  In the event of a downturn, it’s anticipated that as much as $1.7 billion dollars will be required to pay out benefits.

What would happen if the fund ran dry?

Connecticut would have to borrow the funds from the federal government as it did in 2009 – at a cost to Connecticut employers of $589 million dollars.

Why is the fund insolvent – again?

That’s a question many in the business community would like answered.

For many, the solution to the problem lies in a structural reform of the system.  What might that reform look like?  Here are some of the proposals:

• Not allowing claimants to collect unemployment benefits while receiving severance pay.
• Freezing the maximum, weekly benefit rate for three years.
• Raising the threshold amount Connecticut workers need to earn in a year to qualify for unemployment benefits (currently that threshold is a mere $600 – an amount unchanged since 1968).

Why hasn’t reform already happened?

As one would expect – there are disagreements between labor and business advocates as to the reforms needed.

In the meantime, Connecticut continues to drift towards another potentially costly problem for those that employ Connecticut’s vast workforce.

If you’re an employer and have questions about labor law and employment law, consider calling on the attorneys at Kainen, Escalera & McHale in Connecticut.  We do one thing and one thing only – we are an employer defense law firm – in fact, we are one of the largest employer defense law firms in the region.  What’s more, each of our attorneys have over 20 years of experience in employment and labor law matters and can provide your business with comprehensive legal counsel ranging from assistance with necessary preventive measures to trial advocacy.  Please contact us if we can help you.

The information provided above is made available by Kainen, Escalera & McHale, P.C. for educational purposes only.  It is not intended to provide specific legal advice to your individual circumstances or legal questions. You acknowledge that neither your reading of, nor posting on, this site establishes an attorney-client relationship between you and our law firm or any of the attorneys in our firm. This information should not be used as a substitute for seeking competent legal advice from a licensed professional attorney in your state nor is it provided for the specific purpose of soliciting your business on any particular matter. Readers of this information should not act upon anything communicated in it without seeking professional counsel.