| The economy may be improving but | | | | elected to be excluded by the employer. |
| unemployment rates show no signs of declining. If | | | | In addition, employees must be able to work and |
| you're an employer looking at potential layoffs, | | | | not terminated for cause (underscoring the need |
| you'll need to understand your obligations related | | | | for thorough documentation when firing for |
| to unemployment insurance ("UI"). | | | | cause). Employees must also be looking for work, |
| How it Works | | | | unless they meet specific requirements from the |
| In its most basic form, unemployment insurance | | | | Wisconsin Department of Workforce |
| works much the same way as other private | | | | Development. Two instances, in which the job |
| insurance policies. Employers pay the premiums, | | | | search requirement may be waived, are when |
| and out-of-work employees file claims. Each | | | | there is a reasonable expectation the worker will |
| employer has its own account, and payment of | | | | return to the same employer's work force or the |
| UI taxes are credited to that account within a | | | | employee will start a new job within four weeks |
| general fund. The balance of the account | | | | of the initial claim for benefits. |
| increases with each unemployment tax payment | | | | Recent Changes in Wisconsin Law |
| made by the employer and decreases with every | | | | In 2009, changes in Wisconsin law extended the |
| unemployment payment made to laid-off | | | | maximum benefits allowed to out-of-work |
| employees. Unlike private insurance, | | | | employees, and made eligible for benefits |
| unemployment insurance is actually a tax, and an | | | | employees who leave employment for "compelling |
| employer who is subject to the tax is required to | | | | family reasons." Allowable reasons include leaving |
| pay it. If an account has insufficient funds to | | | | (1) due to domestic abuse and concerns about |
| cover claims by employees, the employer will | | | | personal safety; (2) due to a verified illness or |
| need to pay additional charges to the state. | | | | disability of a family member that necessitates |
| Employer's UI Tax Liability | | | | the care of the family member; and (3) in order |
| Private employers are subject to unemployment | | | | to move with a spouse to a new job. |
| tax liability if: (1) an employee, either part-time or | | | | Costly penalties |
| full-time, worked for the employer for 20 weeks | | | | The federal government assesses penalties for |
| or more in a calendar year, or (2) the employee | | | | late payments, ranging from 2 percent for a |
| was paid wages of $1,500 or more in a calendar | | | | payment that's up to five days late all the way up |
| quarter by the employer ("wages" include salaries, | | | | to 15 percent for payments not made within ten |
| bonuses, tips, and any other similar benefits an | | | | days of receiving notice from the IRS. |
| employee receives from an employer). | | | | Employers may also be required to pay additional |
| If either of the above conditions is met, the | | | | state penalties for making the deposits at |
| employer is required to pay unemployment taxes | | | | unauthorized financial institutions, failing to file |
| up to the taxable wage base on each employee's | | | | returns or failing to withhold or pay the |
| wages in a calendar year. The taxable wage base | | | | unemployment insurance tax (this penalty can be |
| for 2010 is $12,000. So, for example, if an | | | | as high as 100 percent). |
| employee is paid $15,000 in 2010, only the first | | | | Of course, willful refusal to collect and/or pay |
| $12,000 is taxable to the employer. The remaining | | | | unemployment taxes could lead to heftier |
| $3,000 in wages is excluded from UI tax. | | | | penalties, liens, and potential seizure of the |
| Employers should keep track of employees' | | | | employers real and personal property by the |
| wages for the calendar year to ensure they are | | | | state and/or federal government. |
| not taxed beyond the taxable wage base limit. | | | | Best advice |
| Employee's Eligible for Unemployment Benefits | | | | Unlike other taxes companies pay, there's not |
| In order for an employee to collect | | | | much employers can do to minimize their |
| unemployment benefits, the work conducted by | | | | obligations - aside from making timely payments |
| the employee must be subject to UI taxes for | | | | in full. But employers can take steps to assure |
| the employer ("covered employment"). Only the | | | | employees don't make false or errant claims |
| wages earned in covered employment can be | | | | against the account. |
| used to compute an out-of-work employee's | | | | Review each claim filed by each employee |
| unemployment benefits. Some wages paid to | | | | dismissed or laid off. Watch closely for |
| employees performing certain services for an | | | | misrepresentations about wages or hours worked. |
| employer are excluded from unemployment | | | | If the company has many employees, an |
| taxes, and employees are unable to receive | | | | employer may be tempted to pay less attention |
| unemployment benefits. Examples include real | | | | to individual claims, but doing so is essential to |
| estate and insurance salespersons paid by | | | | protect yourself from unnecessary additional |
| commission only and certain corporate officers if | | | | state and federal fees and penalties. |