Report dated October 22, 2011 reflects our unemployment numbers for week-ending October 15, 2011. During this week, 2,173 initial claims were filed in Utah compared to 2,045 the prior week. The numbers listed below are based on the 4-week moving average.
- 2,113 initial UI claims filed (increase of 122 from the prior week and decrease of 462 from same week in 2010)
- 17,726 continued UI weeks claimed (increase of 20 from the prior week and decrease of 5,004 from same week in 2010)
- 12,285 continued EUC08 weeks claimed (decrease of 37 from the prior week and decrease of 8,196 from same week in 2010)
So, who pays for these Unemployment Insurance benefits? Each state does things a little differently. Here in Utah, benefits are paid directly from employer contributions into the Utah Unemployment Compensation Fund (AKA Trust Fund). Unlike Social Security, employees should never be required to contribute to this fund. In determining liability, there are two questions: Is the claimant allowed to collect benefits? Should the employer be held liable? It is important to note that EUC08 is completely federally-funded and therefore, Utah employers are not held liable for these benefits.
Each employer’s potential liability is based on the same proportion as the wages that come from their company that are used to determine a claimant’s monetary eligibility. If a claimant was paid $50,000 in subject wages during their base period and 25% of this came from Company ‘X’, then Company X is potentially liable for 25% of any benefits paid to the claimant. This applies whether Company X was the claimant’s most recent employer or Company X employed the claimant over a year ago, towards the beginning of the base period. Company X is notified of this potential liability and given the opportunity to protest benefits to the former employee and if they have contributory status, they may also request relief of charges through the adjudication process (see R994-306-201).
There are two different types of employers: contributory and reimbursable. Reimbursable status is available for government organizations, Indian Tribes, and nonprofit organizations and allows them to pay directly for former employees that collect benefits. If Employee A files a claim based entirely on wages from one reimbursable company and receives $200 in benefits, then that reimbursable company would be responsible for paying $200 back to the Trust Fund. If a claimant is eligible to receive benefits using these wages, then the reimbursable employer is not eligible for relief of charges or there would be no way of recouping that loss to the Trust Fund. Of course, if a claimant is denied (see R994-405) because of the reasons surrounding their job separation, availability for work, etc., then there are no benefit costs to cover.
Contributory status applies to the majority of Utah employers and the amount payable to the Trust Fund is based on a contribution (tax) rate. This is calculated annually for each employer and then applied to the quarterly report of subject wages paid. There are three main elements:
Benefit Ratio x Reserve Factor + Social Cost = Overall Contribution Rate
The Benefit Ratio is the amount of benefits paid based on wages from your company divided by the total taxable wages paid by your company over the last four completed fiscal years. This ratio varies by company and new employers are assigned an amount based on the average benefit cost ratio of their major industry. The Reserve Factor is the same for all employers and is used to maintain an adequate reserve in the Trust Fund. This number comes from a 25-year look-back on the total benefits and total wages paid across the state. Social Costs are also the same for all employers and account for benefits that are paid and not attributed to a particular employer. This occurs when base period employers are no longer in business, they are relieved of charges, etc. Because of this element, it is possible for contributory employers to be relieved of charges even when a claimant collects benefits. In these situations, the charge does not affect their specific benefit ratio though it will be used in the calculation of social costs for all employers. More information is available in our Employer Handbook.
Across the nation, many states have had to borrow money from the Federal Unemployment Account to pay for UI benefits after their own trust funds became insolvent. As of October 25, 2011, the outstanding total is over $39 billion. Luckily, Utah is not among these numbers. In fact, as of the most recent quarterly Unemployment Insurance Data Summary from DOL in June 2011, Utah’s trust fund balance is ranked 7th in the nation. The next summary is expected to be published in November.
