SB 817
Department of Legislative Services
Maryland General Assembly
2021 Session
FISCAL AND POLICY NOTE
Third Reader - Revised
Senate Bill 817 (Senator Klausmeier)(Chair, Joint Committee on
Unemployment Insurance Oversight)
Finance Economic Matters
Unemployment Insurance - Study on System Reforms
This emergency bill requires the Maryland Department of Labor (MDL), in consultation
with the Department of Legislative Services (DLS), to study and make recommendations
regarding reforms to the unemployment insurance (UI) system in the State. In conducting
the study and making recommendations, MDL must (1) report monthly to DLS and the
Joint Committee on Unemployment Insurance Oversight on the status of the study;
(2) consult with the U.S. Department of Labor, other state UI agencies, and other
stakeholders; and (3) examine and consider any report or recommendation made by the
National Academy of Social Insurance Unemployment Insurance Task Force of 2021. By
July 1, 2021, MDL must submit an interim report to the joint committee, and by
December 1, 2021, MDL must submit a final report to the Governor, the joint committee,
the Senate Finance Committee, and the House Economic Matters Committee.
Fiscal Summary
State Effect: General fund expenditures for MDL increase by approximately $180,000 in
total in FY 2021 and 2022 (for purposes of this estimate, costs are allocated evenly between
fiscal years). DLS can handle the bill’s requirements with existing budgeted resources.
Revenues are not affected.
(in dollars) FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
Revenues $0 $0 $0 $0 $0
GF Expenditure 90,000 90,000 0 0 0
Net Effect ($90,000) ($90,000) $0 $0 $0
Note:() = decrease; GF = general funds; FF = federal funds; SF = special funds; - = indeterminate increase; (-) = indeterminate decrease
Local Effect: None.
Small Business Effect: None.
 Analysis
Bill Summary: MDL must study:
 expanded eligibility for unemployment benefits for various types of workers,
including individuals who (1) are employed on a seasonal or temporary basis;
(2) have received benefits during the pandemic but are not eligible for regular
unemployment benefits; or (3) leave their job for family reasons or due to job
schedule volatility;
 the costs and benefits of increasing (1) the maximum weekly benefit amount,
including costs and benefits of indexing the weekly benefit amount to account for
inflationary change; (2) the allowance that claimants receive for their dependents;
and (3) the income disregard for part-time work;
 alternative approaches to the experience rating process, including (1) the feasibility
of establishing a new waiver for benefit charges incurred during a UI crisis and
(2) potential methods for minimizing the impact on an employer’s experience rating
when the employer establishes a work sharing agreement with MDL;
 the establishment of clear standards for when an employee is entitled to claim
unemployment benefits if the employee (1) leaves a job due to unsafe working
conditions or in order to guard against an unreasonable risk of infection; (2) is
terminated for refusing to work under unsafe work conditions; or (3) declines to
accept work due to unsafe work conditions;
 existing penalties for fraud and the need for enhancing or altering those penalties;
 the solvency of the Unemployment Insurance Trust Fund, as adjusted based on
implementation of each of the system reforms listed above; and
 any other issue that MDL determines is necessary to include in its evaluation of the
State’s UI system.
Current Law: For general information on the State’s UI program, including information
on the weekly benefit amount, dependent allowance, and the experience rating process, see
the Appendix – Unemployment Insurance.
State Expenditures: MDL advises that federal funds cannot be used to conduct the study;
the federal government covers expenses only if they are used to administer the UI program.
Based on previous studies, MDL estimates consultant costs of $130,000 to conduct the
study and complete both an interim and final report, and an additional $50,000 for data
gathering services by MDL’s information technology vendor. Additional minimal
general fund expenditures may be needed to cover MDL staff hours dedicated to working
with the consultant and preparing the reports, as federal funds may not be used for those
SB 817/ Page 2
purposes either. DLS can consult as needed with existing budgeted resources. Therefore,
general fund expenditures increase by approximately $180,000 in total in fiscal 2021
and 2022.
Additional Information
Prior Introductions: None.
Designated Cross File: HB 907 (Delegate Carey) - Economic Matters.
Information Source(s): Maryland Department of Labor; Department of Legislative
Services
Fiscal Note History: First Reader - February 22, 2021
rh/ljm Third Reader - March 24, 2021
Revised - Amendment(s) - March 24, 2021
Analysis by: Stephen M. Ross Direct Inquiries to:
(410) 946-5510
(301) 970-5510
SB 817/ Page 3
 Appendix – Unemployment Insurance
Program Overview
Unemployment Insurance (UI) provides temporary, partial wage replacement benefits of
up to $430 per week to individuals who are unemployed through no fault of their own and
who are willing to work, able to work, and actively seeking employment. Both the federal
and state governments have responsibilities for UI programs. Generally, funding for the
program is provided by employers through UI taxes paid to both the federal government
for administrative and other expenses and to the states for deposit in their UI trust funds.
Using federal tax revenues, the UI program is administered pursuant to state law by state
employees. The Maryland Department of Labor’s Division of Unemployment Insurance
administers the State’s UI program.
Each state law prescribes the tax structure, qualifying requirements, benefit levels, and
disqualification provisions. These laws must, however, conform to broad federal
guidelines.
Employer Contributions
Most Maryland employers pay State UI taxes, although State and local governments and
some nonprofit organizations reimburse the Unemployment Insurance Trust Fund (UITF)
for claims paid in lieu of paying taxes. Therefore, for most Maryland employers, the State
UI tax rate is a function of:
 the employer’s specific unemployment claims history; and
 the applicable tax table, which is based on the State’s UITF balance and applies to
most taxable employers.
Exhibit 1 shows the range of State UI taxes a typical employer owes based on the tax table
in effect; there are other rates for new employers and in other limited circumstances. State
UI taxes and reimbursements are typically due quarterly; however, Chapter 39 of 2021
allows employers with fewer than 50 employees to defer 2021 State UI tax payments or
reimbursements until January 31, 2022, and authorizes the Secretary of Labor to offer a
similar deferment in 2022. The Act, in conjunction with a recent executive order, also
generally prevents UI claims made during the COVID-19 pandemic from increasing an
employer’s taxes – although Table F, with its broadly higher rates, is in effect in 2021.
SB 817/ Page 4
 Exhibit 1
Tax Tables and Applicable Employer Tax Rates
As of Sept. 30, if the
Trust Fund Balance, Trust Fund
As a Percentage of Balance Then Next Year’s Tax Annual Tax Per Employee
Taxable Wages ($ in Millions) Rates Range from… (Rate x $8,500)
Tax No Single No Single
Table Exceeds Up to Exceeds Up to Claims Claim Up to Claims Claim Up to
A 5.00% N/A $995.8 N/A 0.30% 0.60% 7.50% $25.50 $51.00 $637.50
B 4.50% 5.00% 896.2 $995.8 0.60% 0.90% 9.00% 51.00 76.50 765.00
C 4.00% 4.50% 796.6 896.2 1.00% 1.50% 10.50% 85.00 127.50 892.50
D 3.50% 4.00% 697.1 796.6 1.40% 2.10% 11.80% 119.00 178.50 1,003.00
E 3.00% 3.50% 597.5 697.1 1.80% 2.60% 12.90% 153.00 221.00 1,096.50
F 0.00% 3.00% 0.0 597.5 2.20% 3.10% 13.50% 187.00 263.50 1,147.50
Notes: Fund balance threshold dollar amounts are based on the 2020 taxable wage base and are subject to change
each year. A “single claim” represents the tax rate applicable to the lowest possible rate associated with nonzero
(.0001 to .0027) benefit ratios. Taxes are applied to the first $8,500 earned by each employee, each year; compensation
less than that amount reduces taxes owed accordingly. Table F is in effect in 2021 and is likely to be in effect for at
least two more years; Table A had been in effect since 2016.
Source: Department of Legislative Services
Benefit Payments
Generally, the weekly benefit amount a claimant is eligible for is based on the quarterly
wages that the claimant was paid for covered employment in the calendar quarter of the
claimant’s base period in which those wages were highest. The base period is the first four
of the last five completed calendar quarters immediately preceding the start of the benefit
year, or, if the individual does not qualify under that definition, the four most recently
completed calendar quarters immediately preceding the start of the benefit year.
Weekly benefit amounts range from $50 to $430 per week, based on earnings in the base
period. There is also a dependent allowance of $8 per dependent, for up to five dependents,
although the allowance cannot raise the weekly benefit amount above $430. The first $50
of any wages earned by an individual receiving UI benefits in a given week is disregarded
for purposes of calculating the weekly benefit amount, after which the benefit payment is
reduced dollar for dollar. These amounts do not adjust for inflation. Generally, during a
benefit year, a claimant is entitled to 26 times the claimant’s weekly benefit amount.
During periods of high unemployment, extended benefits may also be available.
SB 817/ Page 5