Jaw-Dropping Update on Massachusetts 2021 Unemployment Tax Rates

Each year, Massachusetts “tax paying” employers (not Reimbursable employers) pay an annual statutory UI Solvency Assessment. The solvency rate used in the calculation of each company’s UI experience for 2021 was announced today and is quickly reverberating through the employer community.  The Massachusetts Department of Unemployment Assistance has set the rate at 9.23%, which is an approximate 1500% increase from last year’s rates! The uniform solvency assessment is designed to cover the cost of benefit payments not directly chargeable to individual employers. However, as required by the non-charging provisions of the CARES Act, all regular Massachusetts COVID-19 related claims paid to eligible workers employed by contributory employers (for-profit and tax paying) are “relieved” to the state’s Solvency fund. This rate is computed annually in accordance with the statutory requirements of M.G.L Chapter 151A and is not within the discretion of the DUA to modify.

Employers in the Commonwealth recently received good news with the unemployment insurance rate freeze locking rates at “Schedule E” for 2 years. This clearly is news on the other end of the spectrum. Employers were not forewarned of the extreme Solvency Assessment escalation and the DUA has indicated the 9.23% rate is due to state law and cannot be overridden by their agency.

To distill this further, Covid-19 related claims were not directly “charged” to the individual experience rated accounts of Massachusetts employers in 2021.  Thus, the earned rate of employers was not subject to escalation as a direct result of Covid-19 claim payments.  The payments were re-directed and charged to the Solvency Fund financed by ALL employers through the Solvency Assessment surcharge, as a shared cost.  This policy prevented many employers from developing negative reserve balances, which would have likely made their 2021 UI base tax rate even higher.  However, it seems now the state aware of the Trust Fund status and solvency mechanism, relied upon the use of this mandated assessment to replenish the Solvency Fund.  In short, they simply shifted the direct rate escalation and liability (due to the forced shut down of our economy) to another line item of every employer’s rate notice. Even those who may have maintained full employment or experienced very little in claim activity.  Regrettably, the DUA and government officials did not alert the employer community, nor provide them sufficient opportunity to mobilize legislative interventions to off-set the impact of this measure.

As the Solvency Fund historically pays for dependency allowances and state funded extended benefits, which were substantially greater last year with the historical increase in unemployment insurance claims – it is not hard to see how the fund would be depleted. Unfortunately, the Solvency Assessment Rate is not discretionary, and the Secretary does not have the ability to set a rate that will not result in a balanced Solvency Fund.  It appears the only way this matter can be addressed is through Legislative action. UTCA has already initiated steps to pursue any and all forms of redress, including engaging legislators directly to pursue legislative remedies immediately. It is our understanding President Biden’s recent infusion of stimulus funds to state governments may be eligible to offset UI Trust Fund insolvency, and we support any calls to do so.

We are asking our clients and impacted employers to contact your legislators  to address this unprecedented and unsustainable cost increase to our very vulnerable employer community.  It is our humble opinion, employers still recovering from economic devastation of the pandemic, are in no position to withstand additional tax burdens and this will ultimately cause more job losses.

Please stand by for more updates and information related to UTCA’s activities to pursue legislative relief and galvanize a coalition of employers in this effort.  Timothy Phelan, General Counsel, Suzanne Murphy, CEO and Evan Murphy, Director of Business Development will be spear-heading efforts related to mobilizing clients in addressing the Solvency Assessment.


Atty. Timothy Phelan: 800.480.7725



Suzanne Murphy: (413) 686-9271



Evan Murphy: (413) 686-9877