Experience rating The Minnesota Unemployment Insurance Program assigns an experience rating to each employer that has paid taxable wages for a minimum period of time. An experience rating is a ratio of the employer’s total taxable wages and total Unemployment Insurance benefit charges. The more unemployment that an employer causes during its experience rating period, the higher the employer’s experience rating will be. To calculate an experience rate, the Unemployment Insurance Program looks to an employer’s history of taxable wages and benefits paid charges over the prior 48-month period. The experience rating period ends on June 30 of the year prior to the year for which the experience rate is being computed. For example, experience rates assigned to employers for 2020 were based on the time period beginning July 1, 2014, and ending June 30, 2019. Employers are not required to have had employees during the entire 48 month period to receive an experience rating. If an employer paid wages on or before July 1 of their first year of coverage, they will be eligible for an experience rating in the third year. For example, an employer that first paid wages on or before June 30, 2018, will receive an experience rating in 2020. In other words, to receive an experience rating, an employer must have paid wages for a minimum of 18 months. By relating employer Unemployment Insurance tax rates to taxable wages and benefits paid charges, experience ratings help ensure that each employer pays UI taxes commensurate to the unemployment for which the employer is responsible. Additional and Special Assessments If the balance in the Minnesota Unemployment Insurance Fund on March 31 falls below certain levels, an additional assessment takes effect for the following year. There is also a provision in the law for a special assessment to pay interest on federal loans which help to keep the Trust Fund solvent during periods of high unemployment. Workforce Development Assessment A Workforce Development Assessment is paid with the quarterly unemployment insurance tax. The assessment collected is deposited in the Minnesota Workforce Development Fund, and is used to fund programs that help unemployed workers with retraining and re-employment, helping to keep them a valuable part of their local economy in Minnesota.
Wage Detail Reports
Minnesota requires employers to file wage reports and pay Unemployment Insurance tax on a quarterly basis. When employers pay covered wages to employees for services provided, they are required to submit quarterly wage reports detailing the wages they paid to each employee, and pay tax on the wages reported. All covered wages paid to both full and part-time employees during the calendar quarter must be reported (this includes commissions, bonuses, tips as well as the cash value of any remuneration paid by a means other than cash), except those wages excluded by law. Examples of covered/noncovered employment are listed in the Unemployment Insurance (UI) Employer Handbook at Covered vs. noncovered employment.
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