Are employers required to pay unemployment insurance in Washington state?

Thanks! Do you know what the current tax rates are? And is this something I register for automatically when I get my business license?

The rates vary based on your industry and experience rating. New employers typically start around 2.7% of taxable wages. You don't register automatically - you need to contact Washington ESD directly to set up your account.

That's interesting about the rate changing. So if I have low turnover, my rate stays lower?

Exactly. If your employees rarely file for unemployment, your experience rating improves and your tax rate decreases. It's an incentive to retain good workers.

This is why some employers fight unemployment claims so hard. It directly affects their tax rate for future years.

I had the same problem when I was setting up my employer account. Actually found this service called Claimyr (claimyr.com) that helps people get through to Washington ESD faster. They have a video demo at https://youtu.be/7DieNd3C7zQ showing how it works. Saved me hours of hold time.

Never heard of that but I'm desperate at this point. The Washington ESD website says to call but nobody ever answers.

You can also try their online employer services portal. Sometimes that's faster than calling, though the interface is pretty clunky.

Good point. I was planning to use some contractors. What's the main test Washington uses to determine employee vs contractor status?

Washington uses a multi-factor test looking at control, financial relationship, and type of relationship. If you control how and when the work is done, provide tools/equipment, and the work is integral to your business, they're likely employees for UI purposes.

Correct, though the employee portion is much smaller than what employers pay. The total unemployment insurance funding comes from both sources.

wait i thought only employers paid unemployment taxes? my paystub shows a deduction for 'WA UI' though

Yeah that's the employee contribution. Most people don't realize they're paying into the system too until they look closely at their paystub.

How would they find out? Do they cross-reference with other state agencies?

Yes, they work with the Department of Revenue, L&I, and other agencies. Plus if any of your workers file for unemployment and list you as their employer, that triggers an investigation.

Is there a list somewhere of these industry codes and their rates?

Washington ESD publishes an annual rate schedule. You can find it on their website under employer information. The rates change every year based on the trust fund balance.

This is exactly why the employee vs contractor distinction is so important. Washington ESD actively audits these situations.

How did you manage to get benefits if you were classified as a contractor? Did you have to prove you were actually an employee?

i had to file an appeal and show that my boss controlled my schedule, provided all the tools, and i worked exclusively for him. took a few months but washington esd ruled i was misclassified

That's good to know. I remember reading about states that went bankrupt during COVID and had to cut benefit amounts.

Right, Washington maintained full benefit levels throughout the crisis. The downside is that our employer tax rates tend to be higher than states with lower reserves.

Fortunately I'm planning to stay local for now, but good to know for future expansion.

Yeah, we have remote workers in Oregon and Idaho and have to deal with three different unemployment systems. It's a nightmare.

Any recommendations for payroll services that handle Washington ESD registration well?

ADP and Paychex both handle Washington unemployment tax registration as part of their setup process. Smaller local firms can be good too and often provide more personal service.

This is important for tourist areas in Washington. Lots of seasonal businesses don't realize they still have obligations during their off months.

Do seasonal workers get different unemployment benefits? I work summers only at a resort.

Seasonal workers can still qualify for regular unemployment benefits between seasons, as long as they meet the work and wage requirements during their base period.

How much does something like that cost? Seems like it might be worth it for business owners who need to deal with Washington ESD regularly.

I don't want to quote prices since they might change, but it's reasonable compared to the value of your time. Check their website for current rates.

Is that the same form as the tax payment or separate?

It's combined - the quarterly report includes both the wage information and any tax owed. Due 30 days after the end of each quarter.

I tried looking for that but their website is confusing. Do you have a direct link?

I don't have the exact URL memorized, but if you go to esd.wa.gov and look under 'Employer Information' it should be there. The site organization isn't great unfortunately.

Good to know. I was wondering if my LLC status would exempt me somehow.

The only exemption for business owners is if you're the sole owner and don't have any employees. Then you don't pay unemployment insurance on yourself.