How to Lower Your UI Taxes

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Unemployment Insurance taxes are a necessary cost of doing business in Idaho. You can take an active role in controlling these costs by understanding the factors that may increase or decrease this tax liability. Factors in maintaining a low tax rate - The Unemployment Insurance (UI) program is based on insurance principles, it is not based on need. It is not a welfare program. Experience rating is the mechanism in the UI tax schedule that determines the tax rate for each employer based on that employer's experience. A "positive" experience rating means the accumulated UI taxes paid by an employer exceed the accumulated benefits charged to their account for benefits paid to their former employees. A "deficit" experience rating means the benefits charged an employer exceed the taxes. New employers with less than three years experience are assigned a "standard" rate. Eligibility for UI benefits - Unemployment Insurance claimants are only entitled to benefits when they 1) have earned a sufficient amount of wages over a designated period of time; 2) become unemployed through no fault of their own; and 3) are currently able to, available for, and seeking employment. Maintaining low tax rates - Employers can minimize their tax rates by minimizing the benefits charged to their account. A dramatic change in an employer's taxable payroll may also affect an employer's tax rate because the tax rate is based partly on the employer's potential liability or risk. Because every employer competes for positive ratings with all other employers every year, the actions and payroll changes of other employers may affect an individual employer's tax rate. Respond timely and accurately to all claims for benefits - Job Service makes the benefit eligibility determination based on the information received from the claimant and former employer. Receiving prompt and complete information from the employer is critical in order to make accurate eligibility determinations. Document, Document, Document - Accurate and sufficient documentation from the employer is critical in determining UI eligibility. Misconduct - The employer has the burden of proving work-related misconduct. Over 50% of Idaho UI claimants who are discharged are ruled eligible for benefits. In many cases this is due to the inability of the employer to provide sufficient evidence of misconduct. Employers are successful in proving misconduct when they communicate employee policies clearly and keep records on employee orientation, training, evaluations, and disciplinary actions. For example, if an employer proves that a worker was discharged for violating a documented and communicated drug or alcohol policy that complies with Idaho law, the employee will be ineligible for benefits. The documentation and communication of that drug testing policy are essential. Quitting for good cause - The claimant who voluntarily quits has the burden of proving they had good cause to quit. To be eligible, a claimant's reason(s) for leaving must arise from the working conditions, the job tasks, or the employment agreement. The test for good cause is whether a reasonable person would consider the circumstances for quitting to be real, substantial, and compelling. Additionally, the employee must show that, after exploring alternatives, the employee had no viable option to quitting. Examples include unsafe working conditions and a hostile work environment. Appeal all decisions you feel are wrong - The appeals process can be time consuming, but if you choose not to participate, you risk an unfavorable decision, which can be costly at tax time.