Small businesses fear being penalized for laying off employees | KOB 4

Small businesses fear being penalized for laying off employees

Brittany Costello
Created: March 19, 2020 06:54 PM

ALBUQUERQUE, N.M.- The New Mexico Small Business Coalition is calling on the governor to help small businesses even more.

Businesses worry that they will be penalized for their former employees collecting unemployment benefits, which is enouraged for those who have been laid off.

"The Unemployment Trust Fund is funded by payroll taxes which are paid for by employers. That tax rate is set by a fairly complicated formula that includes the overall health of the fund, how big it is, the industry that the employer is in, and how many people that each employer lays off," said Bill McCamley, Secretary of the Department of Workforce Solutions.

McCamley said 78% of employers pay the lowest possible rate, right now.

But what happens when the fund starts to deplete and the claims keep coming in?

"We need some relief for employers with this whole thing, meaning we've got to recognize this is a unique situation that shouldn't come back to the employer because they have no control over this," said Carla Sonntag, President of the New Mexico Business Coalition. "This is not an employment practice issue. It's nothing to do with how employers take care of employees. They have no control over this turnover that maybe occurring right now because of the virus."

Sonntag wants the governor to make sure businesses don't face any sort of tax increase based on unemployment claims.

Secretary McCamley said it's not that easy.

"We want to make sure that as we examine what's going on. We do it in a way that is responsible so that workers can be able to get unemployment. That's what we're really focused on over the next three to four weeks," he said.

But what happens if those employees don't have a job to return to?

"We've had a big downturn in oil and gas so that revenue is off and now we have really crippled our travel industry, our restaurants and that revenue is really going to hurt us because we're losing money all the way around," said Sonntag. "So we need to be thinking about New Mexico's future, and yes, we want everyone healthy to enjoy the future, but we need to have common sense about how we move forward here."

McCamley said at the end of June, his office will make a calculation of the tax rate for every employer, based on the formula.

If they get into July and find out that the effects of the taxes will be really heavy on businesses, he said they'll have six months to see if there are ways to remedy that situation before they go into place in January.

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