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News & Press: Government Affairs

InRLA Applauds the State Budget Committee's Action To End the Unemployment Insurance Penalty

Monday, October 19, 2015  
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BLOOMINGTON (October, 16, 2015) - Today, the State Budget Committee unanimously ended the Unemployment Insurance Trust Fund penalty.

Currently, employers are required to pay $105 per employee hired this year and would have been expected to pay $126 per employee in 2016. With the end of this penalty, the state will no longer be using employer pockets to pay off the federal loan.

"This penalty payment greatly impacted labor intensive businesses and is a huge win for the hospitality industry," said Patrick Tamm, CEO and President of InRLA. "Employers have been contributing to this fund for multiple years in increasing amounts and now the hospitality industry will be able to invest back into our people and businesses."

Lennie Busch, CFO, Founder and Co-Owner of One World Enterprises based in Bloomington, Indiana who attended the meeting this morning added "The end of this penalty payment represents extra employees, more efficient and sustainable equipment, and investment in technology to further improve our customer experience in our seven restaurants."

This penalty was the result of a federal loan the state had borrowed to pay unemployment insurance benefits after the Unemployment Insurance Trust Fund went bankrupt in November of 2008. This repayment has been coming out of Hoosier employer pockets to pay back that federal loan every year since.

Michael Hicks, Director of Ball State University's Center for Business and Economic Research, analyzed the issue in "Some Questions and Answers on a Federal Unemployment Tax Act Debt"* and concluded that ending the debt payments will produce positive results for Hoosiers ". . .  about 76.6 percent of the FUTA reduction will translate to wages and salaries for workers, the remainder will be consumed by other non-wage payments (FICA, health care expenditures, etc.) and other uses by business, such as capital investment."

Estimated Impact of FUTA Tax Elimination in 2016 (one time impact) 





Total Employment




Personal Income

$220 mill

$120 mill

$109 mill

Gross State Product

$287 mill

$122 mill

$99 mill

GSP growth





* "Some Questions and Answers on a Federal Unemployment Tax Act Debt" Michael Hicks, Ph.D. Click here to read the full study. 


The Indiana Restaurant & Lodging Association represents more than 2,000 hotel and restaurant properties as well as industry-related service companies. It is these members that help make the hospitality industry the nation's largest private sector employer and one of the state's most politically active and public service oriented industries. Our members are the cornerstone of the Indiana community and the backbone of our state's economy.

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