How can I lower my state and federal unemployment taxes?

Ready to lower your federal and state unemployment taxes (FUTA and SUTA)? Under the Federal Unemployment Tax Act (FUTA) and state laws, employers are obligated to pay payroll taxes to provide unemployment compensation to employees who lose their jobs.

FUTA sets the federal tax rate,while the state tax rate varies by state. By understanding how the system works, employers may be able to cut their rate through efficient claims control.

Here are some things to remember when assessing how to lower your unemployment tax rate:

  • Document unsatisfactory work performance. If you contest an unemployment claim, you need proof of the employee’s misconduct or unsatisfactory work.
  • Keep accurate, complete records. You may protest the awarding of benefits, your share of liability, or your tax rate. You must have specific facts and documentation to support your case.
  • Challenge an Unemployment Claim. Promptly answer requests for information to avoid unnecessary benefit charges. Follow up to make sure that corrections are made and penalties are not assessed.
  • Appeal claims decisions promptly.
  • Separate seasonal workers. Organize a separate corporation to employ seasonal workers so your seasonal unemployment tax rate won’t be applied to your regular staff.
  • Consistency counts. Consistently and uniformly applying workplace rules will help an employer in an unemployment compensation case.
  • Ignorance of a workplace rule is not always a defense. Deliberateness and intentionality are critical components in establishing willful misconduct.

Want to learn more about how our HR team TEL helps our clients lower their federal and state unemployment rates? Click here.

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