ALBANY, N.Y. (NEWS10) — Businesses in New York State, like nearly every state in the union, pay unemployment insurance for each employee. Funding part of what workers get if they claim unemployment benefits.

With many businesses still attempting a COVID rebound, hiring employees back with higher wages, some businesses are getting a bill from the New York State Department of Labor. According to the DOL, 505,000 businesses statewide will have to pay a surcharge so the state can pay interest on a loan it used to cover unemployment benefits during the first year and a half of the pandemic.

“All those borrowings are paid for by increased taxes on employers and when we don’t repay them fully, we pay the federal government interest charges. So the bill employers received last week was that bill,” says Ken Pokalsky, vice president of government affairs for The Business Council of New York State.

Some businesses in the Capital Region NEWS10 spoke with say they have yet to receive a letter from the state. According to a statement from the New York State Department of Labor, “the surcharge is due to unemployment levels not seen since the Great Depression, which resulted in the payment of more than $105 billion in unemployment and pandemic unemployment benefits…” 

Due to the amount of money needed to cover those benefits, the department of labor says the Unemployment Insurance Trust Fund (UI) was “depleted”.

So, the state borrowed $9 billion from the federal government. It has so far paid one billion back. “This is a special assessment. The payment is due by the end of September and this special assessment will pay interest costs so we’ll only get this bill once but we will get it every year until the debt is paid off,” Pokalsky explains.

According to the DOL, the Interest Assessment Surcharge (IAS) comes out to about $27.60 per employee.  “If you’re a small to mid sized employer, this is easily $10,000, $20,000, $30,000 or $40,000 the whole cost of your UI taxes every year,” says Pokalsky.

The DOL says, “decades ago, the NYS Legislature enacted the IAS, which assesses a temporary charge to businesses to ensure the state has sufficient funds to pay the interest owed.” The New York State Department of Labor says the bill must be paid by September.