Contribution Rates

Contribution Rates

Contribution Rates Explained

Beginning in 1992, an employer's contribution rate is based on the multi-schedule contribution rate system shown below in Table 2. The contribution rate schedule to be used depends on the ratio of the current reserve fund to the adequate reserve fund.

Act 2 (10), enacted on 3/11/2010 sets the contribution rate schedule at D for calendar year 2010 and for calendar year 2011 at schedule F.

On February 23, 2011, H.B. No. 1077 H.D. 2 was signed into law as Act 002.  The purpose of Act 002 is to utilize employment and training fund process to assess employers for interest payments on Title XII loan advances.  The Director has the discretion to determine the amount of the increase in the employment and training assessment rate for the calendar year 2011 and has set that increase at .01%.  The employment and training assessment for year 2011 will, therefore, be .02%.  All employers will be assessed the .02% employment and training assessment rate in 2011 including, 5.4% rated employers.  

If interest payments on Title XII advances are subsequently waived by federal law, the .01% assessment increase for interest payments which were collected shall constitute the total employment and training assessment payable by employers for calendar year 2012 and no assessment shall be collected for 2012.  No employer shall receive a refund based on the federal waiver of interest payments.

View Act 002 - H.B. No. 1077 H.D. 2

Employers are advised of their individual contribution rate in March of each year. Contribution rates are based upon the ratio of the employer's reserve balance to your average annual payroll. You can find your contribution rate by finding the tax rate associated with your reserve ratio in the multi-schedule contribution rate system shown in Table 2. All rates are in percentages.

Under the experience rating plan, an employer may be eligible for a reduced rate if certain conditions are met after the account has been chargeable with benefits for the 12-month period prior to the rate computations date (December 31). In March a Contribution Rate Notice is mailed to each employer. The notice for the calendar year will show the tabulation for the average annual taxable payroll, beginning contribution reserve balance, contributions paid, benefits charged to the employer during the previous year and the ending contribution reserve balance. The notice will also show the tabulation for the employer's reserve ratio. The reserve ratio is obtained by dividing the reserve balance at the end of the year by the average annual taxable payroll for the past three years. By applying the Reserve Ratio to the Effective Contribution Rate Schedule, the employer's contribution rate is determined.

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New Employer Contribution Rate

The contribution rate for new or newly covered employers will be the same as the contribution rate assigned to employers with .0000 reserve ratio. See Table 1 for the current new employer rate.

Tax Base

The taxable portion of an employee's annual wages is limited to the "tax base" for that calendar year. An individual employee's wages in excess of the "tax base" are not taxable. The "tax base" is equal to the State's average annual wages of employers contributing to the unemployment trust fund and is computed at the beginning of each calendar year. Act 2 (2010), enacted on 3/11/2010, sets the taxable wage base at 90% of the annual wage base for years 2010 and 2011. For 2010, the taxable wage base is $34,900. For 2011, the taxable wage base is $34,200. See Table 1 for the current tax base.

Employment & Training (E&T) Assessment

Each employer, with a contribution rate greater than zero and less than 5.4% is liable for an employment and training assessment on taxable wages. For 2011, all employers will be assessed the .02% employment and training assessment rate including 5.4% rated employers.  See Table 1 for the current rates.

To determine the E&T amount due, the total taxable wages are multiplied by the assessment rate. No portion of the State E&T assessment will be credited to the employer's reserve account. The E&T assessment amount cannot be taken as a credit against the Federal unemployment tax (FUTA).

Example for 2012: