NYS Department of Labor unemployment tax rates - how does this work for employers?
I'm starting a small business in NY and trying to understand how unemployment insurance works from the employer side. I know I'll need to pay into the system but I'm confused about the tax rates and how claims affect what I pay. Do I pay a flat rate to NYS Department of Labor or does it change based on if my employees file claims? Also what happens if someone I fire tries to claim benefits - do I have to pay more? Really need to understand this before I hire my first employee.
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Sophia Russo
You'll pay State Unemployment Tax (SUT) to NYS Department of Labor based on your experience rating. New employers start at a standard rate around 4.1% on the first $12,300 of each employee's wages in 2025. Your rate can go up or down in future years depending on how many successful claims are filed by your former employees. If you have a lot of claims, your rate increases. Few or no claims, it can decrease to as low as 0.6%.
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Mason Kaczka
•So if I fire someone for cause and they get denied benefits, that doesn't hurt my rate?
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Evelyn Xu
The key thing is you'll get notices from NYS Department of Labor when former employees file claims. You have 10 days to respond if you want to contest it. Make sure you keep detailed records of attendance, performance issues, policy violations etc. If someone was fired for misconduct and you can prove it, they'll likely be disqualified and it won't count against your experience rating.
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Mason Kaczka
•What kind of documentation do they want to see? Just employee handbook stuff or more detailed records?
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Evelyn Xu
•You want written warnings, attendance records, witness statements if applicable, anything showing they violated clear policies. NYS Department of Labor takes documentation seriously in these hearings.
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Dominic Green
been running my business for 8 years now and honestly the unemployment tax isn't that bad if you're careful about hiring and documenting everything. my rate went down to like 1.2% after a few years of no claims. just make sure you respond to every single notice from NYS Department of Labor even if you think the claim is bogus
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Hannah Flores
•What happens if you miss the 10 day deadline to respond? Does the claim automatically get approved?
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Dominic Green
•yeah pretty much, they'll approve it by default and then it counts against your rating even if the person shouldn't have qualified
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Kayla Jacobson
One thing that helped me was using a service to handle the NYS Department of Labor responses. I kept missing deadlines because I'd be traveling or the mail would get buried. Now I use claimyr.com and they monitor all my unemployment notices and handle the responses. There's a video demo at https://youtu.be/qyftW-mnTNI that shows how it works. Saved me thousands in higher tax rates by making sure I never miss a deadline again.
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Mason Kaczka
•Is that expensive? I'm trying to keep startup costs low but missing deadlines sounds costly too.
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Kayla Jacobson
•Way cheaper than what you'll pay in higher unemployment taxes if claims get approved that shouldn't. Plus they know exactly what documentation NYS Department of Labor wants to see.
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William Rivera
Also remember you need to register with NYS Department of Labor as soon as you hire your first employee, can't wait until quarter end or anything. They'll send you all the forms and your account number. Make sure you're making quarterly payments on time too or you'll get hit with penalties.
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Mason Kaczka
•Good point, I was thinking I could handle all this at tax time but sounds like it's ongoing quarterly stuff.
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Grace Lee
honestly the whole system is set up to screw small business owners. they make it super easy for employees to file claims but then you have to jump through hoops to contest bogus ones. and if you make one mistake on the paperwork they just approve everything automatically. been dealing with this BS for 15 years
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Sophia Russo
•I understand the frustration but the system does work if you stay on top of it. The key is treating it like any other business process - have a system in place and follow it consistently.
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Mohammed Khan
Thanks everyone for the detailed responses! This is really helpful. As a newcomer to NY business ownership, I'm realizing there's a lot more to track than I initially thought. The experience rating system makes sense - basically I'm incentivized to hire carefully and document everything thoroughly. I'm definitely going to look into that automated service Kayla mentioned since I travel a lot for my consulting work and can see myself missing those 10-day deadlines. Better to invest upfront than pay higher rates later. One follow-up question - when you register with NYS Department of Labor for the first employee, do they provide clear guidance on what records to keep, or is that something you have to figure out on your own?
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Zainab Ismail
•When you register they'll send you basic info but honestly it's pretty minimal. You'll get better guidance by calling their employer hotline directly - they can walk you through what specific documentation to maintain for different termination scenarios. Also check if your industry has any specific requirements since some sectors have additional rules for what constitutes misconduct.
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