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An Employer's Guide To Unemployment Compensation
Experience Rating

Contribution Rates and Eligibility Requirements for a Rate Based on  Experience 

Employer contribution rates are established on a calendar year basis. Qualification for a rate based on experience (the ratio of chargeable benefit payments to taxable payroll) requires that an employer's "experience account" be chargeable with benefits for at least one full year ending June 30th of the year preceding the year during which the rate will be in effect.

Employers chargeable with benefits for two full "experience years" are rated  on the basis of those two years; employers chargeable for three or more years are rated on the basis of the most recent three years only. 

Rate for Newly Liable Employers 

If an employer's exposure to benefit charges commences on or before July 1st of a given year, the employer does not qualify for an experience rate for that calendar year or the year which follows. If chargeability begins after July 1st, the employer will not qualify for that calendar year and the two years which follow.

If  the employer's account has not been chargeable with benefits for a sufficient period of time to be experience rated, his rate is the higher of 1% or the state's five‑year benefit cost rate.  That rate is computed annually by dividing the total benefits paid to claimants during the five consecutive calendar years preceding the computation date by the total amount of taxable wages for the same period.

Contribution Rate Statements (Form UC‑54A) are issued to all employers during the first quarter of each year, including those with insufficient experience to be experience rated. 

Five‑year benefit cost rates for recent years are as follows: 

 

2000

 

2.9%

 

2002

 

2.1%

 

2004

 

2.4%

 

2001

 

2.4%

 

2003

 

2.1%

 

2005

 

2.7%

Charged Rate

Employers' experience rates are computed by dividing the total benefits charged to an employer's experience account  for the experience period  (one to three years) ended the previous June 30th by the employer's taxable wages for the same period which have been reported by the employer on or before the following September 30th. This figure is the employer's "Benefit Ratio" which, rounded to the next highest one tenth of one percent, is the employer's "charged rate."

Fund Balance Tax Rate 

This rate is added to the charged rate and is established to maintain a balance in the Unemployment Compensation Trust Fund equal to eight tenths of one percent of total wages paid to workers by contributing employers during the years ending the last preceding June 30th .  The Fund Balance Tax Rate is determined as of December 30th each year and ranges from 0% or to 1.4% .

Contribution Rate Factors 

The  contribution rate consists of a percentage which is the sum of: 

1.   The individual employer's charged (experience) rate

AND

2.   The Fund Balance (solvency) tax rate.

Transfer of Experience Ratings 

The law provides for the mandatory transfer of experience of one or more employers to an employer who acquires "substantially all of the assets, organization, trade or business" of a covered employer(s).  Employers who acquire less than "substantially all" may acquire a portion of the predecessor's experience, provided that payroll records have been so maintained that the employment experience of the portion acquired may be readily identified and separated for experience rating purpose.

(Rev. 7/04)

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