How is employer unemployment tax calculated for Washington ESD?

So as a new business I won't have any experience rating history yet? What rate would I start at?

Correct, new employers get assigned the 'new employer rate' which is usually around 2.7% but it changes annually. You'll get your official rate notice from Washington ESD once you register.

That's helpful! So if I have an employee making $80,000, I only pay the unemployment tax on $71,000 of their wages?

exactly! once they hit that wage base amount you stop paying unemployment tax on their wages for the rest of the year

This is why some employers try to fight unemployment claims even when they're legitimate. Higher claims = higher tax rates.

True, but Washington ESD has appeal processes for employers too. If you think a claim was filed incorrectly, you can contest it through their system.

Good to know there's an appeal option. How long does that process usually take?

Never heard of that service before. Does it actually work for employer-side issues or just claimant stuff?

Works for both! I used it to get through to employer services to clarify some benefit charges that didn't look right on my quarterly statement.

How many different fees are there?? This is getting complicated.

Just the experience rate, social cost factor, and administrative surcharge. Washington ESD combines them all into one rate on your quarterly statement so you don't have to calculate each piece separately.

That's the point though - companies that create more unemployment claims should pay more into the system.

I get the logic but it can penalize seasonal businesses or industries that naturally have more turnover through no fault of the employer.

What's the deadline for registering? Is it immediately when I hire someone or do I have some time?

You're supposed to register within 30 days of becoming liable for unemployment tax, which is basically when you hire your first employee in Washington.

Are there any industries that typically have higher or lower rates?

Construction and seasonal industries tend to have higher rates due to more layoffs. Professional services and healthcare often have lower rates due to more stable employment.

That makes sense. My restaurant friends always complain about their unemployment tax rates being sky high.

That's encouraging! How long did it take for your rate to start decreasing?

think it was after the third or fourth year when i had enough history for washington esd to calculate a proper experience rating

Where do they publish the new rates? Is it on their website?

Yes, it's on the Washington ESD website under employer resources. They also mail rate notices to registered employers.

That's oddly specific. Why not just use the most recent data?

It allows time for all claims to be processed and finalized. Unemployment claims can take time to resolve so they need that lag period for accurate calculations.

What kind of records do they want to see during an audit?

Payroll registers, employee time records, tax returns, anything that shows wages paid and taxes withheld. They go back several years sometimes.

Yes! That's exactly what I used it for. Got through in like 20 minutes instead of waiting all day.

I'm skeptical of paying for something that should be free but if it actually works...

Trust me, your time is worth more than what you'd spend on it. I was missing work trying to get through to them.

Really? What kind of incentives are available?

There are sometimes programs for hiring veterans, ex-offenders, or long-term unemployed workers. Check with Washington ESD or your local WorkSource office.

So I'm paying both state and federal unemployment taxes? That's going to add up quickly.

yeah but the federal part is pretty small compared to washington state. the state tax is where the real cost is

I was planning to hire some remote workers in other states. How does that work?

It depends on where they're physically working and the specific arrangements. You might need to register in multiple states. Definitely consult with a payroll service or accountant for multi-state situations.

That's good to hear. I was dreading having to mail in paper forms every quarter.

The online system is actually pretty user-friendly once you get set up. You can even set up automatic payments for your quarterly taxes.

This is starting to feel overwhelming. Maybe I should just use a payroll service to handle all this.

For a small business, a payroll service can definitely be worth it. They handle all the tax calculations, filing, and compliance issues so you can focus on running your business.

Agreed. The peace of mind alone is worth the cost when you're just starting out.

Thanks for all the advice everyone! This has been incredibly helpful. I feel like I have a much better understanding of what I'm getting into.

Good luck with your new business! The tax stuff seems complicated at first but it becomes routine once you get the hang of it.