How much does employer pay for unemployment benefits in Washington state?

Thanks! So if I have 3 employees making $50k each, I'd pay 2.7% on $150k total wages?

Exactly right. And if you have low turnover and few unemployment claims, your rate will go down over time.

Yeah, high-turnover industries definitely pay more. I've seen construction companies with rates over 6% because of seasonal layoffs and high claim volumes.

That's why some employers try to fight unemployment claims - it directly affects their tax rate.

Nope, unemployment insurance is 100% employer-funded in Washington. Employees don't pay anything into the system, unlike some other states.

Wow, I had no idea. That actually makes me feel less guilty about filing for unemployment last year.

Is there a way to estimate what my rate might be in the future? I want to plan ahead.

Washington ESD has rate schedules published annually. The lowest rates are around 0.19% for employers with no claims, highest can be over 6% for high-claim employers.

Interesting, I'll check that out. The few times I've tried calling Washington ESD I've been on hold forever.

I've heard of Claimyr but never tried it. Do they just help you get through faster?

Yeah, they basically monitor the phone lines and call you back when an agent is available. Saved me hours of waiting.

So many little fees and factors! This is more complicated than I thought.

Yeah, and there's also a solvency surcharge that kicks in sometimes when the trust fund gets low.

Good to know! When are the quarterly deadlines?

April 30, July 31, October 31, and January 31. Always the last day of the month following the quarter.

When you acquire a business, you can sometimes inherit their unemployment tax rate if you take over their workforce. It's called successor liability.

ugh that sounds complicated... so we could get stuck with a higher rate?

Potentially yes, but there are ways to structure acquisitions to avoid that. Definitely something to consider in due diligence.

Yes, 501(c)(3) nonprofits and government entities can choose the reimbursement method instead of paying taxes. They pay dollar-for-dollar for any unemployment benefits claimed by their former employees.

That could be better or worse depending on your turnover rate I guess.

Washington ESD can be pretty aggressive about collections. They can file liens, garnish accounts, and even shut down your business in extreme cases.

Yikes, definitely don't want to mess with that then.

Unfortunately no, all new employers start at the same rate. But if you maintain low turnover and avoid layoffs, your rate will drop significantly after a few years.

I guess that makes sense from a risk management perspective.

It's (benefits charged to your account ÷ total taxable payroll) × 100. So if you paid $100k in wages and had $3k in benefits charged, your benefit ratio would be 3.0%.

And that ratio determines which rate schedule you fall into?

Exactly. Lower ratios mean lower tax rates.

Well I learned something new today! I honestly thought it was like Social Security where both employer and employee contribute.

Actually in some states employees do pay into unemployment, but Washington is employer-only.

That's exactly right. It's an incentive system to encourage stable employment.

Makes sense from a policy perspective, even if it's expensive for businesses.

I'll definitely look into that. Getting straight answers about tax obligations is crucial for planning.

Same here, might be worth it just for the peace of mind of talking to an actual person.

Good point. I should probably budget for bookkeeping help or payroll software.

Definitely worth it. Mistakes on payroll taxes can be expensive to fix.

Glad we could help! Feel free to ask if you have more questions as you get your business set up.

Thanks everyone! This forum is way more helpful than trying to decipher the ESD website.

I'll make sure to do that. Thanks for all the advice!

Yeah, and keep good records from day one. Makes everything easier when it's time to file.

So I need to stay on top of the rate schedules each year?

Yep, Washington ESD publishes new rate schedules annually. Usually comes out in the fall for the following year.

There's no minimum tax amount, but there are minimum wage thresholds. If you pay less than $1,000 in wages in a quarter, you might not owe any unemployment tax at all.

That's good to know for very small operations.

Thanks for adding that detail about the wage base adjustment! I hadn't considered how that could affect my taxes even with a stable rate. When you mention "taxable wages" vs total compensation, are things like health insurance premiums and retirement contributions excluded from the unemployment tax calculation?