The Healey and Biden administrations have reached an agreement concerning Massachusetts’ $2.5 billion unemployment insurance error from 2020 to 2022. An audit in 2023 revealed that the Baker administration mistakenly withdrew $2.5 billion from federal unemployment insurance benefits instead of the state fund. Over 18 months, state and federal officials negotiated a resolution with limited transparency.
Lauren Jones, Secretary of Labor and Workforce Development, informed the National Federation of Independent Business (NFIB) that Massachusetts must repay $2.1 billion to the federal government, along with $70 million in interest and penalties. “The original tabulation of the debt surpassed $3 billion,” said Jones, but it was reduced to $2.1 billion, payable over ten years starting December 2025. The state will cover only the interest and penalties while employers are responsible for the $2.1 billion from the UI Trust Fund.
“This series of missteps and blunders is unacceptable,” commented NFIB’s Massachusetts state director Christopher Carlozzi. He emphasized that employers have already faced two UI rate increases in 2024 and 2025, with projections indicating insolvency by 2028.
Carlozzi urged lawmakers to reform what he described as a “broken UI system” by addressing generous benefits and lax eligibility requirements rather than increasing taxes. Massachusetts has often been ranked poorly for its UI system, currently placing 47th according to the Tax Foundation.
NFIB called on small business owners to contact their elected officials about this issue, noting ongoing repayments for COVID-19 assessments amounting to $2.7 billion.
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