On this video, I’d like to discuss with you Unemployment and how it works. Unemployment is federally mandated but is state administered and so it does vary from state to state.
Unemployment taxes are paid 100% by the employer. The employee never pays the unemployment tax. There is both a federal tax and a state tax.
The federal tax is 0.6% of the first $7000 paid to each employee each calendar year. Each state has a different rate and a different payroll threshold but works the same way as the federal tax.
At the beginning of each calendar year, the calculation starts over until each employee reaches $7000 for federal tax and whatever the threshold is in the state in which the employee resides. Thus, payroll is typically higher at the beginning of the year until those thresholds have been met.
Regarding unemployment claims, individuals are eligible to claim unemployment if the reason for their separation was through no fault of their own. If the employer is downsizing, reorganizing, has a change in operations would be reasons an individual would be eligible. Voluntarily terminating, no-call, no-show, termination for gross misconduct would not qualify one for unemployment.
Employers should pay close attention to and know the process of how their state notifies one of a new claim. In most states, it is done electronically, and employers are required to login to a system which they must monitor to ensure claims that appear on their account are legitimate and not fraudulent. We have seen a lot of fraud in recent years.
Claims can be disputed but you need to make sure you have the proper documentation and proof of the reason for your dispute, or the claim will be awarded to the former employee.
Rates are assigned based on claims charged against the employer’s account. It is so important to monitor or have someone monitor claims to keep rates low.
If you would like to learn more about the unemployment process or any other Human Resource matter, please reach out to me.