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Lawmakers and business owners react to new DOL surcharge due by September

  • / Updated:
  • Hayley Jones 

The state Department of Labor recently sent out a notice to at least 500,000 businesses letting them know they’re on the hook to help pay back debt owed to the federal government.

Lawmakers and business owners are reacting to the new surcharge that all New York employers paying into the Unemployment Insurance Trust Fund are required to pay.

NY owes $9 billion to feds, only paid back $1 billion so far: Business owners on hook for the rest

The Interest Assessment Surcharge is a 23% fee on wages, roughly $27.60 per employee.

The surcharge will go towards paying off a $9 billion loan the state owes under the federal CARES Act, a pandemic-era provision to support unemployed workers during the height of the COVID-19 shutdown.

As a result of the $105 billion in unemployment and pandemic unemployment funds paid out by the state between March 2020 and September 2021, New York’s Unemployment Insurance Trust Fund was completely depleted, explains the DOL on its website.

That’s when the state had to borrow funds from the federal government in order to maintain UI and pandemic benefits while the pandemic programs were in effect, they say.

NYS has only paid back $1 billion thus far of the $9 billion loan.

Related: Operate a business in New York? Get ready for new unemployment insurance fee when your tax bill arrives

Finger Lakes Partners (Billboard)

Assemblyman McDonald sites “competing priorities” of Legislature as reason for surcharge

According to 13 Wham, many business owners they spoke to blame New York’s Democratic leadership for allowing this surcharge to land in the hands of small businesses after the state received so much money from the federal government.

Democratic Assemblyman John McDonald (D-Cohoes) is a small business owner himself. He received a notice from the DOL, which said he owed over $500 because of the surcharge.

The majority of state assemblymembers, particularly upstate, wanted to direct state funds to help pay down the loan, said McDonald, but they came up short.

He cited “competing priorities” of the Legislature as a major reason for the surcharge.

Hospital relief, childcare and education are at the forefront of many lawmakers’ minds right now, said McDonald.

Related: Small businesses face a big insurance hike if NYS doesn’t pay back $8 billion in federal unemployment loan