With the current inflation rate hovering at just above 8% and wages increasing nationally at just 5%, it was welcomed news last month from the New Jersey Department of Labor and Workforce Development (NJDOL) it will reduce taxes earmarked for the states Temporary Disability Insurance and Family Leave Insurance programs for 2023.
Jobholders will experience some relief in 2023, as their tax rate “contribution” from the Temporary Disability Insurance program will drop from 14% down to 0% next year, along with over a 50% drop in the Family Leave rate, putting real dollars back into workers’ paychecks.
State officials said there will be an averaging of over $56 dollars in savings on Temporary Disability taxes and over $55 dollars in savings on Family Leave taxes.
Tax Rate Drops From 14% to 0% in 2023
Collectively, the state’s roughly four million workers will save approximately $223 million per program next year. Employers, who have participated in the state tax program in the past, will be moved to a more business friendly “contribution table” and will experience a collective reduction of $20 million dollars in their Temporary Disability tax program for fiscal year 2023. Employers do not contribute to the Family Leave program.
Over the past three years, both insurance contribution rates have been declining largely due to increasing fund balances. In 2019 new legislation signed into law raised the level of wages earned that were subject to wage taxes beginning on Jan. 1, 2020, for employees covered under the Temporary Disability and Family Leave Insurance programs, the additional taxes covered increases to those benefits.
Currently, the fund balances within both the Temporary Disability and Family Leave Insurance programs have outpaced benefit claims partly due to COVID related unemployment insurance programs.
While NJDOL Commissioner Robert Asaro-Angelo trumpeted the Temporary Disability and Family Leave funds as being “robust” resulting in a decrease to contribution rates, he expressed concern that workers in New Jersey “may be missing the opportunity to utilize these vital programs.”
“We’re working with our partners in the community to increase awareness of these critical resources, so workers know their rights and take the time they need and deserve to care for themselves and their families without risking their job or paycheck,” said Asaro-Angelo.
Federal Outreach Grant
Earlier this year, a $1.1 million dollar grant by NJDOL was awarded through its inaugural Cultivating Access, Rights and Equity (CARE) program to further promote outreach and educational initiatives and benefits throughout the Garden State, for eligible workers, including Temporary Disability Insurance and Family Leave Insurance.
On July 1, 2020, state legislators along with Gov. Phil Murphy expanded the Temporary Disability and Family Leave Insurance programs for eligible workers to receive up to 85% of their average weekly salary, along with raising the maximum weekly benefit rate in 2022 to $993 for each program.
Lawmakers approved extending the amount of Family Leave benefits, doubling the time to 12 consecutive weeks per year, along with increasing “intermittent time off” from 42 days to 56 days.
Family Leave Benefits
The expanded law allows a worker with more than one job to take a leave of absence from one job while still working for the other, provided their usual work schedule is not exceeded.
Family Leave is another provision within the program that allows new mothers to bond with their newborn or to care for a blood-related family member. Temporary Disability can be used for pregnancy, childbirth, or a serious health condition.
In order to quality for these insurance programs in 2022, an applicant must have earned at least $240 per week for 20 weeks or earned at least $12,000 during the base weeks.