Vermont Business MagazineOnThursday, October 4, 2018, the Vermont Department of Labor announced changes to the Unemployment Insurance (UI) program and the State minimum wage. BeginningJanuary 1, 2019, employers will see a reduction in the taxable wage base amount that they currently pay on unemployment taxes by $2,000. Also beginningJanuary 1, 2019, the State’s minimum wage will increase to $10.78 per hour.
Nearly 22,600 employers remit state unemployment taxes to the Vermont Department of Labor on an annual basis. These taxes are deposited into the Unemployment Insurance Trust Fund and are used for the payment of unemployment insurance benefits to eligible claimants. The unemployment trust fund is “forward-funded,” meaning tax schedules are designed to raise more funds during periods of economic growth to ensure that there is adequate funding during economic recessions. The Department moved to Tax Rate Schedule III (3) in July of 2018, which triggered a reduction in unemployment insurance tax rates for employers starting July 1, 2018. The additional reduction in the taxable wage base announced today was also triggered by the move to the Tax Rate Schedule III and is effectiveJanuary 1, 2019.
Per legislation passed in 2014, for the last four years the State’s minimum wage was mandatorily set by statute. As that legislation has run its course, pre-existing legislation related to the annual change in the minimum wage resumed. The increase being announced by the Department of Labor for 2019, and in years to come, is determined by a calculation of inflation set in statute using the Consumer Price Index (CPI). The recent increase of 2.7% to the CPI applied to last year’s minimum raised the rate by $0.28 per hour to the new level of $10.78 per hour startingJanuary 1, 2019. This change also impacts the minimum wage of “tipped employees”. The Basic Tipped Wage Rate for service or tipped employees equals 50% of the full minimum wage or $5.39 per hour startingJanuary 1, 2019. The minimum wage will continue to increase each year with inflation as calculated by the Department of Labor.
“Our unemployment trust fund has been steadily recovering from the impacts of the recession and is currently funded at an amount that is considered healthy,” said Labor Commissioner, Lindsay Kurrle. “The health of our trust fund is owed to the businesses who saw more than a 100% increase in their taxable wage base amounts since 2008. The confirmed changes represent tax relief for employers for the second year and an increase in benefits to claimants, both of which are encouraging for Vermont. We are also glad to see an increase in the minimum wage as tied to inflation, meaning natural growth in our economy will result in more money for our entry level wage earners.”
For more information regarding tax schedules and rates, please visit the Vermont Department of Labor’s website:http://labor.vermont.gov/unemployment-insurance/employers/ui-tax-rates/
An updated minimum wage poster for workplaces can be found here:http://labor.vermont.gov/wordpress/wp-content/uploads/Minimum-Wage-Poster.pdf.
Source: MONTPELIER, VT –Vermont DOL 10.4.2018