Unemployment Laws in Ohio by pdx47913

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Unemployment Laws in Ohio document sample

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									        Emerging Issues In Unemployment
          “That Was Then, This is Now”



Jared Vale/Matt Kaufer
Barnett Associates, Inc.
    Overview of the System
   Established in 1935

   Facilitate Economic growth

   State Specific laws

   Abundance of information
  ESTIMATED UI TAX COST

           Avg.
          Taxable                     Average   Estimated
US EE’s   Wages     Taxable Payroll    Rate     Tax Cost

50,000    $12,000   $600,000,000      3.10%     $18,600,000


10,000    $12,000   $120,000,000      3.10%      $3,720,000


 1,000    $12,000   $12,000,000       3.10%       $372,000
TAX RATE CALCULATIONS
   All states have an experience rating system which
    determines the employer’s state contribution tax
    rate.

       RESERVE RATIO – 31 states

       BENEFIT RATIO – 17 states

       COMBINED – 2 states
          RESERVE RATIO
RESERVE RATIO % = RESERVE BALANCE (CONTRIBUTION – BENEFIT CHARGES)
                      ___________________________________________________________________


                     TAXABLE PAYROLL avg. 3yr, 5yr or fiscal


   31 states use the reserve ratio calculation

   Tax rate is based on an employer’s cumulative
    experience

   Higher ratio = lower tax rate

   Calculation
RESERVE RATIO SAMPLE
7/1/03-6/30/04 Taxable Payroll   $10,000,000
7/1/04-6/30/05 Taxable Payroll   $10,000,000
7/1/05-6/30/06 Taxable Payroll   $15,000,000
    AVG. Taxable Payroll         $11,666,667


       Balance as of 7/1/05       $1,000,000
              Contributions        $115,000
            Benefit Charges        ($66,000)
      Balance as of 6/30/06       $1,049,000

                                               Look up on chart
       RESERVE RATIO                 8.99%


CONTRIBUTION RATE                    1.30%
                       OHIO RATE SCHEDULE
(a) A negative balance of:                                                  (c) A positive balance of:

20.0% or more ..............................           6.5%     01.0% or more, but less than 01.5% .........   4.6%
19.0% but less than 20.0% ..................           6.4%     01.5% or more, but less than 02.0% .........   4.5%
17.0% but less than 19.0% ..................           6.3%     02.0% or more, but less than 02.5% .........   4.3%
15.0% but less than 17.0% ..................           6.2%     02.5% or more, but less than 03.0% .........   4.0%
13.0% but less than 15.0% ..................           6.1%     03.0% or more, but less than 03.5% .........   3.8%
11.0% but less than 13.0% ..................           6.0%     03.5% or more, but less than 04.0% .........   3.5%
09.0% but less than 11.0% ..................           5.9%     04.0% or more, but less than 04.5% .........   3.3%
05.0% but less than 09.0% ..................           5.7%     04.5% or more, but less than 05.0% .........   3.0%
04.0% but less than 05.0% ..................           5.5%     05.0% or more, but less than 05.5% .........   2.8%
03.0% but less than 04.0% ..................           5.3%     05.5% or more, but less than 06.0% .........   2.5%
02.0% but less than 03.0% ..................           5.1%     06.0% or more, but less than 06.5% .........   2.2%
01.0% but less than 02.0% ..................           4.9%     06.5% or more, but less than 07.0% .........   2.0%
More than 0.0% but less than 1.0% ..........           4.8%     07.0% or more, but less than 07.5% .........   1.8%
                                                                07.5% or more, but less than 08.0% .........   1.6%
                                                                08.0% or more, but less than 08.5% .........   1.4%
(b) A 0.0% or a positive balance of less than 1.0% ..... 4.7%   08.5% or more, but less than 09.0% .........   1.3%
                                                                09.0% or more, but less than 09.5% .........   1.1%
                                                                09.5% or more, but less than 10.0% .........   1.0%
                                                                10.0% or more, but less than 10.5% .........    .9%
                                                                10.5% or more, but less than 11.0% .........    .7%
                                                                11.0% or more, but less than 11.5% .........    .6%
                                                                11.5% or more, but less than 12.0% .........    .5%
                                                                12.0% or more, but less than 12.5% .........    .4%
                                                                12.5% or more, but less than 13.0% .........    .3%
                                                                13.0% or more, but less than 14.0% ....….       .2%
                                                                14.0% or more ..............................
                  BENEFIT RATIO
     BENEFIT RATIO % =                BENEFIT CHARGES
                         ______________________________________________________________


                         TAXABLE PAYROLL avg. 3yr, 5yr or fiscal



   17 states use the benefit ratio calculation

   Tax rate is based on up to five years of experience of
    the employer (most common, 3 years)

   Higher ratio = higher tax rate

   Calculation
BENEFIT RATIO SAMPLE

    EXP. YR.     BENEFIT    TAXABLE
     ENDED      CHARGES     PAYROLL


June 30, 2004     $28,000    $500,000


June 30, 2005         $0     $550,000

                                         BENEFIT   CONTRIBUTION
June 30, 2006         $0     $600,000
                                          RATIO        RATE

  TOTALS          $28,000   $1,650,000   1.6969%      1.70%
    TAX COST TECHNIQUES
   Voluntary Contributions

   Joint Accounting

   Audits / Protests
                   VOLUNTARY
                  CONTRIBUTIONS
   Offset benefit charges or increase reserve balance to reduce the
    SUI tax rate
   Deadlines differ from state to state
   Calculations differ from state to state
   Restrictions differ from state to state
   26 states currently permit voluntary contributions:
     Arizona              Maine                North Dakota
     Arkansas             Michigan             Ohio
     California           Minnesota            Pennsylvania
     Colorado             Missouri             South Dakota
     Georgia              Nebraska             Texas
     Indiana              New Jersey           Washington
     Kansas               New Mexico           West Virginia
     Kentucky             New York             Wisconsin
     Louisiana            North Carolina
VC SAMPLE
7/1/03-6/30/04 Taxable Payroll   $10,000,000
7/1/04-6/30/05 Taxable Payroll   $10,000,000
7/1/05-6/30/06 Taxable Payroll   $15,000,000
    AVG. Taxable Payroll         $11,666,667


       Balance as of 7/1/05       $1,000,000
              Contributions        $115,000
            Benefit Charges        ($66,000)
      Balance as of 6/30/06       $1,049,000


       RESERVE RATIO                 8.99%


CONTRIBUTION RATE                    1.30%
   V/C CALCULATION
                Average Taxable Payroll   $11,666,667


                  X Next Reserve Ratio         9.00%

Balance Needed to Lower One Rate Group     $1,050,000


                    LESS Old Balance       $1,049,000



             Voluntary Contribution           $1,000
                       VC SAMPLE
                                 ORIGINAL       WITH V/C
7/1/03-6/30/04 Taxable Payroll    $10,000,000    $10,000,000
7/1/04-6/30/05 Taxable Payroll    $10,000,000    $10,000,000
7/1/05-6/30/06 Taxable Payroll    $15,000,000    $15,000,000
       AVG. Taxable Payroll       $11,666,667    $11,666,667
          Balance as of 7/1/05     $1,000,000     $1,000,000
                Contributions       $115,000       $115,000
              Benefit Charges       ($66,000)      ($66,000)
        Balance as of 6/30/06      $1,049,000     $1,050,000

          RESERVE RATIO               8.99%          9.00%

   CONTRIBUTION RATE                  1.30%          1.10%
  V/C SAMPLE CONTINUED
TAXABLE        INITIAL   TAX RATE       EST.
PAYROLL       TAX RATE   WITH VC      SAVINGS

$15,000,000     1.30%      1.10%        $30,000

                          VC AMOUNT     ($1,000)

                              NET
                          SAVINGS      $29,000
         JOINT ACCOUNTING
   Combines SUI tax experience of multiple entities in one state
    into a single account
   Duration differs from state to state
   Restrictions differ from state to state
   Deadline for application differs from state to state
   Title differs from state to state (Unity of Enterprise, Common
    Rate Group)
   Twelve states currently permit joint accounting:
    Arizona              Delaware              New York
    Arkansas             Hawaii                Ohio
    California           Missouri              South Carolina
    Connecticut          New Jersey            West Virginia
 JOINT ACCOUNT SAMPLE
      ESTIMATED
SUB    TAXABLE       INDIVIDUAL      JA        EST
       PAYROLL        TAX RATE    TAX RATE   SAVINGS


A     $ 15,000,000     0.70%       0.70%           $0

B      $ 4,000,000     2.00%       0.70%      $ 52,000

C      $ 3,000,000     1.50%       0.70%      $ 24,000

D      $ 2,000,000     2.50%       0.70%      $ 36,000
                                  TOTAL      $ 112,000
           AUDIT
• Annual Contribution Rate Notice
    • Contributions / Charges
    • Penalty Tax Rates / Appeals
• Quarterly Reports
    •1st qtr. Largest Tax Cost
• Annual Federal 940
• Tax Ledger Analysis
                  UI Audit: Example
A large financial institution received the following rate notice from the state of NJ. The
client proceeded to pay the associated tax amount.

When Barnett conducted an initial audit for this client a state error was found, and
investigated. The corrected error resulted in the following refund:




  Taxable Payroll           Issued Rate           Correct Rate               Refund


   $110,000,000                 2.20%                 1.40%                 $880,000
Claims Control

             Claims
           Processing

Benefit
                        Determination
Charge                    Protests
Auditing

           Claims
           Control

                         Witness
Appeals
                        Preparation


           Hearings
Benefit Charge Statements
 The state agencies issue benefit charge statements by legal
   entity listing the names of claimants and amount of
   unemployment benefits being collected against the account.



 Benefit Charge Statements are issued to the Employer weekly,
   monthly, quarterly, or annually depending on the state by State
   Unemployment Account Number (not by division).

 Employer should audit the Benefit Charge Statements to ensure there are
  no incorrect or fraudulent charges against unemployment accounts; errors
  are protested to recover credits due.
How Are Benefits Charged To The
Employer?

 In most states, benefits are charged to all employers in the claimant’s base
  period proportionately to the wages paid.
 A few states charge all benefits to the claimant’s most recent employer.
 In others, the employer who furnishes a specific number of days or weeks
  of continuous employment is liable for all charges.
If an employee is not qualified to meet the standards which
they were hired, you should make the separation as soon as
possible. A prompt decision will reduce the amount of
benefits that may be charged to your account.
            LAW CHANGES IN
              PROGRESS
   NEW HIRE REPORTING -
       Mandatory or Optional


   Multiple Worksite Reports
       Mandatory or Optional


   Benefit Wage Audits
       Mandatory or Optional
           LAW & PROCEDURE
               CHANGES
   Address of Record / Worksite

   Electronic Benefits
       Direct Deposit / Debit Card
       Mandatory or Optional


   Best Practices – NASWA
       www.naswa.org
                     RESULTS
   Fraudulent Claims Reduced
   Inaccurate / Incorrect Payments Reduced
       BAM – Benefit Accuracy Measurement
       2005: 89.41%
       2006: 95.46%


   Trust Funds Plush
   Average Rate Lower – 3.1% – 2.9%
    SYSTEM IMPROVEMENTS -
         ELECTRONIC
   ITSC INITIATIVE – UI SIDES
       Separation Information Data Exchange System:
            Standardized system to exchange separation requests for
             multistate employers and TPAs
            6 States (CO, GA, ID, IA, UT & WI)
            Beta Testing October 2008
            Projected to be fully operational by 2009
       PORTAL
            Web based entry for smaller regionalized firms
            ELECTRONIC
        IMPROVEMENTS Cont…
   STATE INITIATIVE:
       IL- Live (WOW!)
       MN- Developing batch process and portal


   PORTAL: web-based interface for smaller
    regional firms
       NC, OH
         BENEFITS OF UI SIDES
   Cost savings
       Reduced postage and handling costs
   Easier/better control and management of
    separation information request workload
   Improves timeliness
   Improves completeness and accuracy of
    information supplied to state UI agencies
Thank You For Attending!
Jared Vale/Matt Kaufer
Barnett Associates, Inc.

								
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