Test Your Knowledge: How to Minimize UI Taxes

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False. Improper payment of benefits is a serious problem that has a direct financial impact on employers and can result in higher UI taxes and/or time off from work to attend an appeal hearing (in person or by phone) if benefits are contested.

True. Employers can take an active role in reducing improper UI benefit payments by providing important information in a timely manner to the EDD. Employers are required to:

  1. Report all new hires / re-hires to the State Directory of New Hires within 20 days.
  2. Respond to requests for verification of employee earnings in a timely manner.
  3. Provide timely and accurate employee separation information and any other known potential eligibility issues by the due date.

True. Consequences for inaccurate, delinquent, or delayed reporting of information may include payment of benefits to an unqualified claimant that could ultimately result in higher taxes, and/or time off from work to attend an appeal hearing (in person or by phone) if benefits are contested.

True. Tax-rated employers are taxed based on the amount of UI benefits paid to former employees. Reimbursable employers must pay the full costs of the improper payment paid. Benefits are paid, or not paid, based on information provided by unemployed individuals seeking benefits and information provided by the employer. If information from employers and/or information requested by the EDD is not received in a timely manner, benefits may be paid to unqualified individuals.

True. Accurate and timely verification of employee weekly earnings, when requested, ensures that the correct amount of UI benefits is paid and that improper payments are detected and prevented.

False. Separation information provided by an employer is used to verify the claimants‘ reason for being unemployed. Accurate and timely reporting of separation information by the employer ensures that a claimant does not receive UI benefits for which he/she is not qualified. The EDD relies on employers to also provide info on any known potential eligibility issues (e.g., refusals of work, not able to work, etc.)

True. Inaccurate, incomplete, delinquent, or failure to report employee information is against the law and could have serious consequences for the employer including: incorrect charges for improper payments of benefits to former employees, increases in UI taxes, and fines or penalties.

False. Reporting employee hire information and eligibility issues information are required by state and federal law.

True. Employers must report new hires to the State Directory of New Hires within 20 days of hire. The state UI agency reports information provided by employers to the federal National Directory of New Hires.

False. Employers, not employees, pay taxes to fund UI benefits.

True. It is important for an employer to provide as much information as possible about the former employee when it is requested by the EDD. The EDD determines the former employee’s eligibility for UI benefits based on state law and through objective fact gathering from both the employer and the claimant.