Senate Laws Instead of Santa Clause?
Are UI benefits actually costing employment during this Holiday Season? Thanks to the State House and Senate Committee proposed UI tax laws, it very well might be. PA has jumped from approximately $2 billion in UI contributions to almost $5 Billion just last year. PA employers pay no less than $200/employee in tax but not more than $900 While that may not seem like a lot to smaller companies, companies with 100 employees, for example, will need to factor a minimum $20,000 and a maximum of about $87,000 just in UI expenses alone. Factor that dollar amount into the total amount of the several other types of taxes and expenses of said labor force. Social Security tax, workman’s comp premiums, health insurance, and the list goes on. If you are a new Employer, you are looking at around $300 per employee for UI compensation taxes. New Contractors pay just over $800 per employee, much higher than most other states. As a result, some PA Employers are recruiting employees outside of the State. In turn, PA is left with fewer jobs for job seekers, thus increasing the Unemployment rate in this state.
New Years, New Standard
When a new Employer begins to pay wages, the “New Employer Rate” will be applied for the first 2 to 3 years from the time that employer begins to pay wages. However, a New Employer who files no taxable wages during each quarter of one of the last 4 years would not have sufficient employment experience to base a calculated rate on. New Employers pay a base contribution rate of 3.68 percent in 2017 which will increase to 3.69 percent in the New Year 2018. New Construction Employers pay 10.19 percent which will increase to 10.22 percent in 2018. Employer contributions are then determined by multiplying the Employer Rate by the number of Taxable wages paid out by the Employer.
Contributory Employers may be transferred to a Standard Rate after they no longer qualify for a New Employer Rate. The Standard Rate would be adjusted according to the amount remaining in the reserve account. Employers with a Zero to Positive reserve account balance will be have the benefit of a lower standard rate that those with negative balances. Solvency measures are, thus, by law, added to the Employer’s rate accordingly. In 2017 the Standard Rate to transitioning (former) “New Employers” with positive reserve account balances was 7.42%. The new standard for the New Year 2018 is 7.29%. The Standard Rate to transitioning New Employers with negative reserve account balances was 11.41% in 2017 and 11.29% in the coming New Year 2018. The higher each Employer’s unemployment rate, the higher that Employer can expect their contribution rates will be. Vice versa, Employers who maintain higher rates of stable employment retention can expect to see lower rates.
Delinquent Employers can expect to see a contribution rate 3% higher than the rate they would, otherwise, have been assigned. An Employer can be considered to be delinquent by failing to timely file their registration documents, fail to file Quarterly UC tax returns, and/or failing to pay all quarterly taxes, and/or failing to pay balances in full.