While unemployment insurance (UI) tax is one of the expenses that no business owner really loves to pay, we do understand why it’s necessary. This tax provides the funds for out-of-work professionals who file for unemployment assistance, and the good news is that a business’s tax rate is based on the company’s incidence of involuntary unemployment. Essentially, the less frequently you lay off or fire employees without cause, the lower your unemployment insurance tax rate will be.
Since 2005, when I became the sole owner of FWE, a foodservice equipment manufacturer, I have worked to ensure job security for our employees by maximizing both profits (to prevent layoffs) and employee satisfaction and morale. And when FWE still operated in Crystal Lake, Illinois, those efforts were rewarded with a low UI tax rate that allowed us to continue to maintain profits and growth.
Unfortunately, when I moved FWE to Portland, Tennessee, in 2013, this benefit did not cross state lines. On the contrary, despite FWE’s 60-plus years of existence, we were treated as a new business because of our new-to-Tennessee status. And as a result, our UI tax rate was through the roof. In theory, new businesses have yet to establish a track record regarding involuntary unemployment, so their rates are higher until they have time to prove that they shouldn’t be.
I understood this logic, but I also knew that FWE’s track record more than spoke for itself.
Now, getting a new bill introduced — let alone passed — is rarely an easy proposition. But I knew that not only did the state of Tennessee want to keep my company around for a while, but it also wanted to attract other successful businesses from other states that would hire more locals and help to drive the Tennessee economy.
So I reached out to Tennessee Representative William Lamberth, and we begin working on legislation that would consider a company’s previous UI tax rate when relocating to Tennessee. With the help of Senator Bill Ketron, the bill was introduced during Tennessee’s 108th General Assembly and was passed by a near unanimous vote. Legislation HB1386 took effect on July 1, 2014, with officials estimating at the time that it would attract at least five new businesses to the state each year.
I don’t say all of this to brag, or to suggest that I’m some uniquely powerful business leader with the ability to pull strings on Capitol Hill. I say this so that every other business leader understands his or her potential to affect changes that not only improve the way their companies do business, but that also impact their entire local economy.
In today’s volatile political environment, in which our elected officials may or may not share our personal views, there may be some hesitation about reaching out to local legislators — especially if we think our business issue is too small small for them to care about. But if you look at the dozens of cities vying for Amazon’s new headquarters — each with differing demographics and political leanings — you’ll see that red and blue are of little consequence when there’s green involved.
So I encourage you to connect with your local representatives. Reach out to let them know they’re doing a good job, or even just to introduce yourself. And the next time you notice a problem that could be changed with new legislation, you may have a new friend in high places who can make it happen. Remember: Their job is to represent you, so your success is theirs, too.