If you own a business, you are required to pay a state unemployment tax (SUTA) in each state where you have employees. This tax is imposed based on wages; usually on the first $10,000 to $15,000 earned by each of your employees, and varies state by state. In Massachusetts, the 2012 SUTA rates ranged from 1.26% – 12.7% on the first $14,000. Although January is quickly coming to a close, the state of Massachusetts has yet to release the 2013 rates. Once released, employers must make the necessary adjustments retroactive to January 1, 2013.
As we await the release of the new rates, you might be wondering how they are determined. One factor in determining the SUTA rate is your unemployment claims experience in the previous year(s). If you want control over your rate, then take control of your business practices that impact unemployment claims. There are many things you can do to minimize claims experience over time and thus lower your SUTA rate. Here are five areas businesses can focus on to impact their future SUTA rates;
- Improve hiring practices to yield the best qualified hire
- Communicate performance expectations in writing
- Enhance your performance improvement practices to include specific goals and measurements
- Document, document, document, and
- Provide final warnings and clearly identify consequences for not meeting expectations
Unless you’ve been focused on these areas in 2012 then you are likely not yet in control of your unemployment claims activity and ultimately your SUTA rate for 2013 will be affected. By being proactive this year, you can help affect a more favorable rate in 2014.