Gov. Northam announces tax freeze on unemployment insurance to protect businesses

Virginia businesses tax break

RICHMOND, Va. (WWBT) - Tuesday, Governor Ralph Northam announced temporary changes to the Commonwealth’s Unemployment Insurance (UI) program that would support Virginia workers and businesses that have been affected by the COVID-19 pandemic.

Executive Order Seventy-Four requires the Virginia Employment Commission (VEC) to mitigate a potential rise in the UI experience rating tax for businesses by holding them harmless for lay-offs that occurred during the pandemic. The temporary change will protect Virginia businesses from having to pay an additional $200 million to replenish the Unemployment Insurance Trust Fund.

The governor is also directing the VEC to begin automatically distributing UI benefits to unemployed Virginians who have been held in the agency’s determination process.

“I am proud of what the Virginia Employment Commission has been able to accomplish, but there is still unprecedented need. In the face of federal inaction, these changes will put more of our unemployment insurance funding into the hands of unemployed workers and small business owners who desperately need it,” said Governor Northam.

Northam signed the special session budget that included $210 million to backfill the Unemployment Insurance Trust Fund, which is currently borrowing federal dollars to pay out benefits. In addition, to improve customer service, the Governor’s budget proposal includes nearly $15 million to support technology upgrades and additional customer service staff at the VEC.

“It has been a long road to recovery for our workers and small businesses, and the winter season will bring its own set of unique challenges,” said Chief Workforce Development Advisor Megan Healy. “Bold action is required to ensure that Virginians have the resources they need to keep their heads above water and our economy moving forward. I am proud that the Commonwealth is further strengthening its UI program, which has already served as a lifeline to countless Virginians since the start of the pandemic.”

Copyright 2020 WWBT. All rights reserved.