How much does a company pay for unemployment benefits when employees file claims?
I'm starting a small business in NY and trying to understand the costs. When my employees file for unemployment with NYS Department of Labor, how much am I going to be paying? Is it a percentage of their wages or a flat rate? I heard something about experience ratings but I'm confused about how that works. Also does it matter if they quit vs get laid off? Any business owners here who can explain the actual costs?
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Dana Doyle
As a new employer, you'll pay the standard rate which is currently 4.1% on the first $12,300 of each employee's wages in 2025. So maximum of $504.30 per employee per year. Your rate can go down to as low as 0.6% or up to 9.9% based on your experience rating - basically how many of your former employees have filed UI claims. The more claims, the higher your rate becomes.
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Darcy Moore
•That's not as bad as I thought! So if I have good retention and don't lay people off, my rate should stay low?
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Liam Duke
yeah it definitely matters if they quit or get fired. if someone quits voluntarily or gets fired for misconduct the claim usually gets denied so it won't count against your experience rating. but if you lay them off or fire them without cause and they get approved for benefits, that's when it hits your rating
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Manny Lark
•This is important - you should always respond to NYS Department of Labor when they send you forms about a claim. If you don't respond and the person gets benefits when they shouldn't have, it still counts against you.
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Rita Jacobs
I've been running my business for 8 years and my rate is down to 1.2% now because I've only had a few legitimate layoffs. The key is documenting everything properly when you do have to let someone go. NYS Department of Labor will send you forms to fill out about why the person separated - be honest but make sure you explain the circumstances clearly.
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Darcy Moore
•Do you handle those forms yourself or use an accountant? Seems like there's a lot of paperwork involved.
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Rita Jacobs
•I do them myself, they're not too complicated. Just make sure you respond within the deadline or they'll approve the claim automatically.
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Khalid Howes
One thing to watch out for - if you have trouble reaching NYS Department of Labor when you need to discuss a claim or ask questions about your account, I found this service called Claimyr at claimyr.com that helps you get through to an actual agent. They have a video demo at https://youtu.be/qyftW-mnTNI showing how it works. Really helped me when I needed to contest a claim that should have been denied.
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Ben Cooper
•Interesting, I've been on hold for hours before trying to reach them about questionable claims.
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Naila Gordon
UGH don't even get me started on the unemployment system. I swear they approve claims they shouldn't just to avoid doing the work to investigate properly. Had an employee quit without notice, claim they were "constructively dismissed" and somehow got approved for benefits. Cost me thousands in increased premiums.
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Dana Doyle
•Did you appeal that decision? You usually have 30 days to request a hearing if you disagree with their determination.
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Naila Gordon
•Yeah I appealed and won eventually but it was a huge hassle. The whole system is set up against employers.
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CaptainAwesome
Another cost to factor in is that NYS also charges employers for disability benefits (DBL) and paid family leave (PFL) on top of unemployment insurance. For 2025, DBL is 0.5% on wages up to $142.80 per year per employee, and PFL is about 0.511% capped around $385 annually per employee. So your total payroll tax burden for these programs combined will be higher than just the UI rate. Make sure you're budgeting for all three when calculating your labor costs!
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