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OLR Bill Analysis
SB 711
AN ACT CONCERNING COVID -19 RELIEF FOR SMALL
BUSINESSES AND REQUIRING FEDERAL REGULATORY
ANALYSIS FOR PROPOSED STATE REGULATIONS.
SUMMARY
This bill creates a “non-charge” against an employer’s experience
rate for the unemployment benefits paid to former employees whom
the Labor commissioner (or his designee) determines became partially
or totally unemployed because of COVID-19. (This provision codifies
Executive Order 7W (§ 2), which the governor issued on April 9, 2020.)
The bill also establishes a sales and use tax exemption for small
businesses for personal protective equipment used or worn to prevent
COVID-19 infection or transmission. Lastly, it requires state agencies
to prepare a federal regulatory analysis when adopting regulations.
Generally, the analysis must compare the proposed regulation with
any similar federal regulations.
EFFECTIVE DATE: (1) July 1, 2021, for the unemployment
provision and sales and use tax provision, with the latter applicable to
sales occurring on or after that date; (2) October 1, 2021, for the
regulatory analysis; and (3) January 1, 2022, for a conforming change.
§§ 1 & 2 — UNEMPLOYMENT NON -CHARGE
The bill creates a “non-charge” against an employer’s experience
rate for the unemployment benefits paid to former employees whom
the Labor commissioner (or his designee) determines became partially
or totally unemployed because of COVID-19. This includes former
employees who, through no fault of their own, became partially or
fully unemployed during the public health and civil preparedness
emergency declared by the governor on March 10, 2020, and any
period of extension or renewal. In effect, this allows employers to lay 2021SB-00711-R000183-BA.DOCX
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off these employees without increasing the employer’s unemployment
taxes (see BACKGROUND).
As with most other unemployment non-charges, the bill’s non-
charge provision does not apply to “reimbursing employers” (e.g., the
state and municipalities) who do not pay unemployment taxes but
instead directly reimburse the unemployment trust fund for the
benefits collected by their former employees.
§ 3 — SALES AND USE TAX EXEMPTION
The bill establishes a sales and use tax exemption for small
businesses for personal protective equipment used or worn to prevent
COVID-19 infection or transmission. Under the bill, a small business
(1) is a corporation, limited liability company, partnership, sole
proprietorship, or individual, operating a business for a profit and (2)
has up to 100 full-time employees, including subsidiaries or affiliated
corporations. The bill does not establish a mechanism for sellers to
verify which businesses are eligible for the exemption.
§§ 4 & 5 — FEDERAL REGULATORY A NALYSIS
The bill requires state agencies to prepare a federal regulatory
analysis when adopting regulations. They must do so before, or
concurrently with, posting a notice of intent to adopt regulations on
the eRegulations System. The analysis must identify (1) the proposed
regulation’s scope and objectives, (2) each comparable federal
regulation and how it differs from the proposed regulation, (3) any
adverse impact of the federal regulation on small businesses, and (4)
the extent to which the agency attempted to avoid the adverse impact
when developing the regulation. The agency must also submit the
analysis to the Regulation Review Committee.
For purposes of this analysis, a “small business” is a business entity
that, including its affiliates, (1) is independently owned and operated
and (2) employs fewer than 250 full-time employees or has gross
annual sales of less than $5 million. The agency may define “small
business” to include a greater number of full-time employees, up to the
applicable federal standard or 500, whichever is less. 2021SB-00711-R000183-BA.DOCX
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BACKGROUND
Related Bill
HB 5377, reported favorably by the Labor and Public Employees
Committee, disregards an employer’s benefit charges and taxable
wages between July 1, 2019, and June 30, 2021, when calculating the
employer’s unemployment tax experience rate for taxable years
starting on or after January 1, 2022.
Unemployment Non-Charge
In general, a portion of a private-sector employer’s unemployment
insurance tax is based on the employer’s “experience rate,” which
reflects the amount of unemployment benefits paid to former
employees. Typically, laying off employees leads to a higher
experience rate and higher unemployment tax for the employer. The
law, however, allows several non-charging separations in which an
employee can collect benefits that are not charged against a former
employer’s experience rate (e.g., voluntarily leaving work to care for a
seriously ill spouse, parent, or child), and thus do not increase the
employer’s unemployment taxes. In these instances, the cost of the
benefits paid to the former employee is shared by all employers who
pay unemployment taxes.
COMMITTEE ACTION
Commerce Committee
Joint Favorable
Yea 23 Nay 0 (03/11/2021)