How do companies pay for unemployment benefits in New York - confused about employer taxes
I'm trying to understand how unemployment benefits actually get funded. I know when I file my weekly claims with NYS Department of Labor, the money comes from somewhere but I'm not clear on how companies pay into the system. Do employers pay a tax for each employee? Is it based on how many people they lay off? My company just had layoffs and I'm curious about how this all works from the business side. Does anyone know the specifics of how companies fund unemployment insurance in New York?
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Keisha Johnson
Employers pay unemployment insurance taxes to fund the system. In New York, there are two main components: State Unemployment Tax (SUTA) and Federal Unemployment Tax (FUTA). The SUTA rate varies based on the employer's experience rating - companies with more layoffs pay higher rates. It's calculated as a percentage of each employee's wages up to a certain wage base. The NYS Department of Labor adjusts these rates annually based on the employer's claims history.
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Yara Sabbagh
•That makes sense! So if a company lays off a lot of people, their tax rate goes up the following year?
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Paolo Rizzo
Yeah basically employers pay quarterly taxes to NYS Department of Labor based on their payroll. New employers start at a standard rate but after a few years their rate gets adjusted based on how many former employees file UI claims. It's kind of like insurance - the more claims against you, the higher your premiums. Companies hate layoffs partly because it costs them more in unemployment taxes later.
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QuantumQuest
•This explains why some companies fight unemployment claims so hard! They're trying to keep their tax rates down.
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Amina Sy
I had trouble reaching NYS Department of Labor about employer tax questions when I was doing payroll. Kept getting busy signals and disconnected calls. Finally used a service called Claimyr (claimyr.com) that got me through to an actual agent. They have a video demo at https://youtu.be/qyftW-mnTNI showing how it works. Made it so much easier to get answers about our company's unemployment tax rate and payment schedule.
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Oliver Fischer
•Interesting, never heard of that service but makes sense given how hard it is to get through to NYS Department of Labor by phone.
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Natasha Petrova
The whole system is basically a safety net funded by employer contributions. When you get laid off and file your weekly claims, you're getting benefits that your former employer (and all other employers) paid into the fund. It's not like the company writes a check directly for your specific benefits - it all goes into a big state fund that NYS Department of Labor manages.
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