California employers, hit by an increase in the minimum wage this month, have another cost hike to worry about: an increase of as much as $168 per employee in the annual federal unemployment insurance tax, a sum that’s due at the end of the month.

It’s all because of a $10 billion federal loan the state took out during the recession to pay surging unemployment insurance claims. The state has been paying back the loan for the last six years by surcharging employers on the unemployment insurance tax.

California’s unemployment insurance program is funded exclusively by taxes on employers, who pay the tax on the first $7,000 in wages paid to each employee. During good economic times, employers that generate fewer unemployment claims generally are rewarded with a lower tax rate.

But not this time, thanks to that huge debt. All employers in California are paying taxes under the highest rate schedule allowable under state law. An additional solvency surcharge brings the highest state unemployment insurance tax rate to 6.2 percent.

That’s in addition to the increased $168 federal tax. Altogether, that brings the total unemployment insurance tax for each employee to a maximum of $667.

Employers will face an additional increase of $21 per employee for the current calendar year, for which taxes will be due on Jan. 31, 2018. After that, the federal surcharges are set to end and the unemployment insurance tax will drop for employers when they pay their tax bill two years from now.

That is, unless there’s a steep downturn in the economy that forces the state to borrow again from the feds.

Underlying all this, according to the California Chamber of Commerce, is an unemployment benefits increase that took effect in 2001. The chamber opposed the increase, saying there were no offsetting cost reductions and predicting that the unemployment insurance trust fund would have a greater tendency to run deficits, which is exactly what happened.

Early ‘Job-Killer’ Bills

Normally, the chamber releases its annual list of dozens of “job-killer” bills in the spring, well into the state legislative session.

But this year, the chamber is off to an early start, already targeting four bills as job killers. The bills:

• AB 5, by Lorena Gonzalez-Fletcher, D-San Diego, and Ash Kalra, D-San Jose, requires employers with 10 or more employees to first offer part-time employees the chance to perform additional hours of work before hiring a new employee or contractor. Gonzalez-Fletcher said in a release that the bill is designed to boost earnings for part-time workers. But the chamber said in its release that the bill “will create unnecessary delays and burdens on small employers to accommodate employee and consumer demands.”

• SB 62, from Hannah-Beth Jackson, D-Santa Barbara, would expand the state’s family leave law to include care for grandchildren, grandparents, and siblings. The employee would be eligible for up to 24 weeks of protected unpaid leave in a 12-month period. Gov. Jerry Brown vetoed a similar proposal in 2015.

• SB 33, by Bill Dodd, D-Napa, prohibits mandatory arbitration of specific claims involving fraud, identity theft, or misuse of personal identifying information. “It’s unacceptable for consumers to be blocked from our public courts to recover damages for fraud and identity theft,” Dodd said in a press release introducing his bill. But the chamber contends this unnecessarily interferes with arbitration agreements and might be preempted by the Federal Arbitration Act.

• Companion bill SB 63, also by Jackson, which would require employers with 20 or more employees working within a 75-mile radius to provide 12 weeks of protected unpaid parental leave. Brown vetoed a similar proposal last year.

Jackson said in a press release announcing both bills that they are intended to ensure that more Californians can take leave to care for a newborn or a seriously ill family member without the fear of losing their jobs.

But the chamber said both bills would increase costs and litigation risks for employers. 

It promised that more job-killer bills would be identified in coming weeks.

Tighter Rent Control?

Landlords in Beverly Hills might be facing tighter rent controls under recommendations that the City Council is set to consider at its Jan. 24 meeting.

Among the recommendations likely to be on the table:

• Requiring landlords who evict tenants without cause to pay those tenants a relocation fee.

• Lowering the allowable annual rent increases from the current 10 percent.

• Establishing a rental registry program in which landlords would self-certify that their buildings and apartment units meet health and safety standards. The city would also randomly inspect about 10 percent of the 8,600 rental units in the city each year.

The city’s Human Relations Commission late last week was set to hold a forum to hone the recommendations to send to the council.

Staff reporter Howard Fine can be reached at [email protected] or (323) 549-5225, ext. 227.