One of the most important issues facing employers in Florida is the pending dramatic increase in unemployment taxes. The Florida House and Senate will take up legislative relief in the first week of the session and quick action is expected by the Governor. The action may come as early as the first day of the session, March 2. But how did we get here and what does this mean for the future?
Let’s take a minute for a refresher on unemployment compensation. Every state has an unemployment trust fund. Employers pay taxes to fund this trust fund. When an employee receives unemployment benefits, the benefits are paid from this fund. The individual tax rate a company will pay is based on a statutory formula. In Florida, this formula is based on a variety of statewide factors, as well as a factor for unemployment claims made by former employees of the company. This individual company factor is based on the company’s unemployment experience during the previous three years.
As Florida’s economy boomed, a healthy surplus developed in the trust fund. The legislature opted to reduce the taxes on employers. All was well until the Great Recession. In the fourth quarter of 2008, the Trust Fund had a balance of $1.3 billion. By the end of June, 2009, the balance was just under $450 million. On August 24, 2009 the balance was zero. The falling fund balance caused an automatic trigger to increase taxes to replenish the fund. In addition, statutory changes made by the Florida Legislature in 2009 increased the wage base on which the tax is levied. The wage base was changed from the first $7,000 of an employee’s earnings in a year to a tax on the first $8,500 of earnings. This meant a company with the very best possible experience saw their tax obligation grow from $8.40 per employee to $100.30 per employee, an increase of 1,094%!
Two bills have been introduced to provide some relief; the House bill is HB 7033, and the bill in the Senate is SB 1666. These bills will reduce the wage base back to the previous $7,000 limit and will delay for 2 years the additional taxes that were intended to replenish the fund. Both bills passed out of committee last week.
This tax relief is certainly welcome; however, this relief casts a long shadow over 2012 and beyond. The fund must be returned to solvency and the money we have borrowed from the Federal government must be repaid. Hopefully the economy will have recovered sufficiently to ease the sting of the tax increase we will ultimately face.
We’ll keep up with the legislation and post frequent updates here on Landrum Lagniappe. Check back often!
Filed under: Notes from Ted
It’s been an exciting time along the Gulf Coast. Our Saints finally made it to the Promised Land and came home with a World Championship. Mardi Gras became Lombardi Gras! As I reflected on the Saints season, four lessons occurred to me that I think we can apply to our own organizations.
Theme
A number of organizations use themes to unify around mission. I have been greatly influenced by Vern Harnish, author of the Rockefeller Habits. Verne has written extensively on the use of themes (check out gazelles.com). The Saints made “Finish Strong” their mantra for the 2009 season. After letting games get away from them enroute to 7-9 and 8-8 records in the 2 previous seasons, the team united around “Finish Strong.” They did indeed finish Superbowl XLIV strong. What about your team, do you have a unifying theme that you can rally around?
Confidence
Another big influence on me has been the work of Jim Collins (see jimcollins.com). Collins writes about the Stockdale Paradox, the need to have an unshakeable faith that you will prevail while confronting the brutal facts of the moment (see Chapter 4 of Good to Great). After being outscored 10-0 in the first quarter, the Saints settled down. You had the sense that they knew they would prevail in the end. They went on to outscore the Colts 31-7 in the remaining 3 quarters. What about your organization? In these uncertain economic times, have you instilled within the organization the confidence that you can face the brutal facts of the moment, yet know in the end you will prevail?
Preparation
Both quarterbacks in Superbowl XLIV are known for the hours they spend in film study. But the defining moment in the game for me was Tracy Porter’s 74-yard interception return for a touchdown, with 3:12 left in the game, giving the Saints a 31-17 lead. Said Porter “It was great film study. All week we watched it on film and on third down, that was a big route for them. They went to it a lot. And when that route came, it was like I was watching it on film. And when I caught the pick, my mindset was to score.” Is your organization that well prepared? Have you planned and studied your tasks and processes to the point that it comes second nature? That your mindset is to score?
Purpose
Finally, and what I believe to be the most important lesson for all of us in the Saints victory, was the sense of purpose Coach Sean Payton created in his team. “After Katrina, when the Saints were able to get back and play in the Superdome, certainly there was some symbolism that evening. I think playing good football and giving them something to be proud of is important” said Payton in a press conference in the week before the game. Payton created a strong sense of purpose in his team. They were not just playing for themselves or their organization; they were playing for an entire region. They were reminded constantly of what they were playing for. How about your organization? Do you have a sense of purpose? Do you re-inforce that sense of purpose throughout your organization? Have you connected your organization’s purpose to something larger?
It is an exciting time along the Gulf Coast; we are still enjoying Lombardi Gras. I hope the lessons of themes, confidence, preparation and purpose can help make your organization World Champs. Who Dat!!
Filed under: Notes from Ted | Tags: "human resources consulting", Human Resources, PEO
Landrum Lagniappe. So exactly what is lagniappe (lan-yap)? It’s a Louisiana French term that means “a little something extra”. Here on the Gulf Coast when we order a dozen oysters and the shucker gives us 13, that’s lagniappe. That is what we intend to do with this blog; give you a little something extra. We’ll write about the important issues facing employers. We’ll bring you the best of the web so you won’t have to search for the resources you need. We’ll bring you breaking news that employers and your employees need to know. We’ll share the thoughts and insights of the professional staff here at Landrum.
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Ted
