Do employees pay for unemployment insurance - confused about NYS Department of Labor deductions
I just started a new job and I'm looking at my paystub trying to understand all the deductions. I see state disability insurance but I don't see unemployment insurance listed anywhere. My coworker told me that employees don't pay into unemployment but that doesn't sound right to me. If we don't pay into it, how does the NYS Department of Labor fund unemployment benefits? I'm really confused about how this whole system works. Can someone explain if employees contribute to UI or not?
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Taylor To
Actually your coworker is correct! In New York, employees do NOT pay into unemployment insurance. Only employers pay unemployment taxes to fund the system. You'll see deductions for state disability insurance (SDI) and federal taxes, but unemployment insurance is entirely employer-funded. The NYS Department of Labor collects these taxes from employers based on their payroll and claim history.
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Oliver Cheng
•That's so weird to me! So if I lose my job and file for unemployment, I'm getting benefits from something I never paid into? How is that fair to the employers?
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Ella Cofer
It's actually pretty smart when you think about it. Employers have the power to hire and fire, so they bear the cost of unemployment. Plus, it gives them incentive to avoid laying people off unnecessarily since their unemployment tax rates can go up if they have too many claims. The NYS Department of Labor uses a system where employers with higher claim rates pay higher taxes.
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Kevin Bell
•exactly this! my old company was always bragging about their low unemployment tax rate because they rarely laid anyone off
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Savannah Glover
Wait I'm confused now... I swear I remember seeing unemployment deductions on my paystub at my last job. Are you sure employees don't pay anything?? Maybe it varies by state?
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Taylor To
•You might be thinking of a different state. Some states like Alaska, New Jersey, and Pennsylvania do have employee contributions for unemployment insurance, but New York is employer-only. You were probably seeing the state disability insurance deduction which is separate.
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Savannah Glover
•Ohhhh that makes sense! I was probably confusing SDI with unemployment. Thanks for clearing that up.
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Felix Grigori
I had such a hard time getting through to the NYS Department of Labor when I needed to understand my claim status last year. If you ever need to talk to someone there about unemployment taxes or anything else, I found this service called Claimyr that actually gets you through to an agent. Check out claimyr.com - they have a video demo at https://youtu.be/qyftW-mnTNI that shows how it works. Way better than sitting on hold for hours!
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Oliver Cheng
•Good to know! I'll bookmark that just in case I ever need to contact them about anything.
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Felicity Bud
its totally employer funded in NY which is why some companies are so quick to fight unemployment claims... they dont want their rates going up
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