Vision Payroll

This week’s question comes from Josh, a company owner. We’re paying more in state unemployment tax this year than we have in the past. Even though we didn’t lay anyone off, our DUA experience rate increased from last year. How is our Massachusetts DUA experience rate determined? Answer: The DUA Experience rate is determined by the Massachusetts Division of Unemployment Assistance (DUA), which is headquartered in Boston. The DUA also has career centers throughout the state including Attleboro, Brockton, Cambridge, Everett, Fall River, Gardner, Gloucester, Greenfield, Haverhill, Holyoke, Hyannis, Lawrence, Leominster, Lowell, Lynn, Marlboro, Milford, New Bedford, Newtonville, Northampton, Norwood, Pittsfield, Plymouth, Quincy, Salem, Southbridge, Springfield, Taunton, Wareham, Woburn, and Worcester.

DUA Account Is a Record of Four Types of Adjustments

The DUA maintains an individual account for every employer required to pay unemployment insurance contributions. The account balance is an accumulation of the following four types of adjustments:

• The employer’s wages subject to contribution,
• The contributions actually paid by the employer,
• The unemployment insurance benefits charged to the employer, and
• Any account balance adjustment.

Computation Year Runs from October 1 To September 30

The account also provides an opening and a closing balance for the computation year (October 1 through September 30). An account balance carries over from year to year as long as the employer is required to file quarterly reports.

Account Balance Is Used to Determine Contribution Rate

DUA uses each employer’s account to determine an annual contribution rate for that employer. The experience rating process is the method used to determine the rate.

September 30 Is the Computation Date

The last day of each fiscal year, September 30, is called the “computation date” when an employer account is closed to compute the rates for the following calendar year. Contributions paid in October are credited to the employer’s account as if paid in September.

Vision Payroll Will Provide Further Information on the Experience Rating System

Over the next several weeks, Vision Payroll will provide further information on the experience rating system. Contact Vision Payroll if you have specific questions about the experience rating system that you would like to have addressed.

According to the US Department of Labor, in the week ending August 6, the advance figure for seasonally adjusted initial claims was 395,000, a decrease of 7,000 from the previous week’s revised figure of 402,000. The 4-week moving average was 405,000, a decrease of 3,250 from the previous week’s revised average of 408,250.

Advance Seasonally Adjusted Insured Unemployment Rate Decreases

The advance seasonally adjusted insured unemployment rate was 2.9% for the week ending July 30, a 0.1 percentage point decrease from the prior week’s unrevised rate of 3.0%.

Advance Seasonally Adjusted Insured Unemployment Decreases

The advance number for seasonally adjusted insured unemployment during the week ending July 30 was 3,688,000, a decrease of 60,000 from the preceding week’s revised level of 3,748,000. The 4-week moving average was 3,718,750, a decrease of 15,250 from the preceding week’s revised average of 3,734,000.

Every business should understand the implications of workplace harassment. Businesses should also understand the proper response if harassment occurs. Establishing and effectively communicating clear guidelines will help enable a safer work environment for all employees and provide evidence of the employer’s good faith efforts to take action, be accountable for workplace behavior, and address harassment behaviors in the workplace.

How the Anti-Harassment Policy Checklist Can Help

The Anti-Harassment Policy Checklist addresses areas including:

• Content Areas
• Employee Communication
• Monitoring Commitment

Download the Anti-Harassment Policy Checklist Now

The Anti-Harassment Policy Checklist can be downloaded from the Checklists area in the Essentials tab section of the MyHRSupportCenter. If you’re not yet signed up or would like a free trial of MyHRSupportCenter, contact Vision Payroll today.

The US Department of Labor (DOL) recently announced a $670,000 National Emergency Grant to provide re-employment services to approximately 145 former workers of FTCA, Inc. (FTCA) who were affected by layoffs at the company’s plant in Somerset, PA. FTCA closed the travel trailer and recreational camper manufacturing facility in January.

DOL Secretary Solis Comments on Grant

“Today’s grant will help these workers update their skills in order to obtain employment in growing local industries,” said Secretary of Labor Hilda L. Solis. “The Labor Department is committed to helping American workers who have lost their jobs through no fault of their own, prepare for the jobs of the future.”

Grant Will Be Operated by Southern Alleghenies Workforce Investment Board

Awarded to the Pennsylvania Department of Labor and Industry, this grant will be operated by the Southern Alleghenies Workforce Investment Board to provide these dislocated workers, all of whom are certified as eligible for Trade Adjustment Assistance (TAA), with access to “wrap-around” and supportive services not available through the TAA program.

Additional Funding May be Available at a Later Date

Of the total award, $334,864 will be released initially. Additional funding up to the amount approved will be made available as the state demonstrates a continued need for assistance.

National Emergency Grants Are Part of Discretionary Fund

National Emergency Grants are part of the secretary of labor’s discretionary fund and are awarded based on a state’s ability to meet specific guidelines.

The New Hampshire Department of Employment Security has announced an increase in the taxable wage base for 2012. The wage base will increase from $12,000 for 2011 to $14,000 for 2012.

Third Consecutive Year the Wage Base Has Increased

This is the third consecutive year the wage base will increase. In 2010, it increased from $8,000 to $10,000 and in 2011 it increased from $10,000 to $12,000.

Find Out the Wage Base for All States by Visiting the Vision Payroll Unemployment Taxable Wage Base Page

Contact Vision Payroll if you have any questions on the New Hampshire unemployment taxable wage base or visit our Unemployment Taxable Wage Base page.

According to the Unemployment Insurance Agency (UIA) of the State of Michigan Department of Licensing and Regulatory Affairs in Fact Sheet 139, the FUTA tax credit reduction rate will increase from 0.6% in 2010 to 0.9% in 2011. Since the determination will not be made until November 1, 2011, this is only a projection at this time.

Standard Credit Rate is 5.4% for 2011

Generally, employers who pay their state unemployment tax by the due date for filing Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return receive a credit 5.4% against their Federal Unemployment Tax Act (FUTA) tax. This credit is claimed on Form 940.

Employers in Certain States Are Subject To Credit Reduction

Federal law provides for a reduction in the FUTA tax credit when a state has outstanding federal loans for two years. The credit reduction is calculated on Schedule A of Form 940.

Michigan Is Subject To Credit Reduction for Third Consecutive Year

Since Michigan was already subject to a credit reduction in 2009 and 2010, the credit reduction will increase to 0.9% for 2011. The credit reduction will continue to increase by 0.3 percentage points each year until the loan is paid, e.g., 1.2% in 2012, 1.5% in 2013, etc.

Rebate Offered To Fully Experienced Employers with a Positive Balance

Fully experienced employers with a positive balance may claim a credit using Form UIA 1110. The credit is the lower of 50% of the additional tax paid due to the credit reduction or the taxable wages for the year of the credit reduction multiplied by the employer’s Nonchargeable Benefits Component (NBC). Based on the eligibility conditions for prior years, the expected eligibility conditions for a 2012 tax credit should be as follows:

1. Your “actual reserve” balance as of June 30, 2010 as shown on your 2011 annual tax rate determination must be positive. If the “actual reserve” is a negative figure, refer to Voluntary Payment information at www.michigan.gov/uia.
2. In 2011, you are in your fifth or subsequent year of coverage with the UIA (you are a fully experienced employer).
3. You pay the 2011 FUTA credit reduction to the Internal Revenue Service prior to January 1, 2013.
4. You certify on Form UIA 1110 the amount of additional FUTA tax you paid for 2011 as a result of the credit reduction.
5. You have taxable wages with UIA in the 2011 calendar year.

Vision Payroll Will Calculate the Credit Reduction for All Michigan Clients

Contact Vision Payroll if you have any further questions on the Michigan credit reduction.

This week’s question comes from Sean, a company president. Connecticut has passed an income tax increase retroactive to January 1, 2011. How does the Connecticut tax law change affect my withholding? Answer: The Connecticut Department of Revenue Services has issued new withholding tables that take the new tax changes into effect.

Number of Tax Brackets Increases from Three To Six

The number of tax brackets under the new law changed from three (3%, 5%, and 6.5%) to six (3%, 5%, 5.5%, 6%, 6.5% and 6.7%). In addition, the 3% rate is phased out for individuals with Connecticut adjusted gross income in excess of the following amounts:

• Single – $56,500
• Filing separately – $50,250
• Head of household – $78,500
• Filing jointly or qualifying widow or widower – $100,500

Revised Withholding Tables and Calculation Rules Took Effect August 1

The withholding tax tables (the withholding tables containing the pre-calculated total amount to withhold per pay period) have been revised to reflect the new rates, the 3% phase out provision, and a catch-up withholding amount. The revised withholding tables are effective August 1, 2011.

Additionally, the withholding calculation rules have been revised to reflect the new income tax rates, the 3% phase-out provision, the recapture tax calculation, and a catch-up withholding amount.

Revised Rules and Tables Include a Catch-Up Provision

The withholding calculation rules were revised to reflect the additional income tax rates, the 3% phase-out provision, the recapture tax provision under each withholding code, and the catch-up withholding amount. The withholding calculation rules instruct employers how to calculate the amount of tax that should be withheld for the remainder of the year from employees who are affected by these changes.

The 2011 withholding tables were revised to reflect the additional income tax rates and the 3% phase-out provision for the remainder of the year. They also include a catch-up amount to make up for the withholding tax for the first seven months of 2011 in which withholding tax was calculated at the rates in effect prior to the new legislation. The catch-up amount was spread out for the remainder of the year beginning on August 1, 2011.

Vision Payroll Is Using Revised Withholding Calculation Rules

Effective August 1, 2011, Vision Payroll is using the revised withholding calculation rules to calculate withholding for Connecticut employees.

Total nonfarm payroll employment rose by 117,000 in July, and the unemployment rate was little changed at 9.1%, the US Bureau of Labor Statistics reported today. Job gains occurred in health care, retail trade, manufacturing, and mining. Government employment continued to trend down.

Household Survey Data

The number of unemployed persons (13.9 million) and the unemployment rate (9.1%) changed little in July. Since April, the unemployment rate has shown little definitive movement. The labor force, at 153.2 million, was little changed in July.

Among the major worker groups, the unemployment rates for adult men (9.0%), adult women (7.9%), teenagers (25.0%), whites (8.1%), blacks (15.9%), and Hispanics (11.3 percent) showed little or no change in July. The jobless rate for Asians was 7.7%, not seasonally adjusted.

The number of persons unemployed for less than 5 weeks declined by 387,000 in July, mostly offsetting an increase in the prior month. The number of long-term unemployed (those jobless for 27 weeks and over), at 6.2 million, changed little over the month and accounted for 44.4% of the unemployed.

The civilian labor force participation rate edged down in July to 63.9%, and the employment population ratio was little changed at 58.1%.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was about unchanged in July at 8.4 million. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

In July, 2.8 million persons were marginally attached to the labor force, little changed from a year earlier. (These data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 1.1 million discouraged workers in July, about the same as a year earlier. (These data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.7 million persons marginally attached to the labor force in July had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.

Establishment Survey Data

Total nonfarm payroll employment increased by 117,000 in July, following little growth over the prior 2 months. Total private employment rose by 154,000 over the month, reflecting job gains in several major industries, including health care, retail trade, manufacturing, and mining. Government employment continued to decline.

Health care employment grew by 31,000 in July. Ambulatory health care services and hospitals each added 14,000 jobs over the month. Over the past 12 months, health care employment has grown by 299,000.

Retail trade added 26,000 jobs in July. Employment in health and personal care stores rose by 9,000 over the month with small increases distributed among several other retail industries. Employment in retail trade has increased by 228,000 since a recent low in December 2009.

Manufacturing employment increased in July (+24,000); nearly all of the increase was in durable goods manufacturing. Within durable goods, the motor vehicles and parts industry had fewer seasonal layoffs than typical for July, contributing to a seasonally adjusted employment increase of 12,000.

Manufacturing has added 289,000 jobs since its most recent trough in December 2009, and durable goods manufacturing added 327,000 jobs during this period.

In July, employment in mining rose by 9,000; virtually all of the gain (+8,000) occurred in support activities for mining. Employment in mining has increased by 140,000 since a recent low in October 2009.

Employment in professional and technical services continued to trend up in July (+18,000). This industry has added 246,000 jobs since a recent low in March 2010. Employment in temporary help services changed little over the month and has shown little movement on net so far this year.

Elsewhere in the private sector, employment in construction, transportation and warehousing, information, financial activities, and leisure and hospitality changed little over the month.

Government employment continued to trend down over the month (-37,000). Employment in state government decreased by 23,000, almost entirely due to a partial shutdown of the Minnesota state government. Employment in local government continued to wane over the month.

The average workweek for all employees on private nonfarm payrolls was unchanged over the month at 34.3 hours. The manufacturing workweek and factory overtime for all employees also were unchanged at 40.3 hours and 3.1 hours, respectively. In July, the average workweek for production and nonsupervisory employees on private nonfarm payrolls was 33.6 hours for the sixth consecutive month.

In July, average hourly earnings for all employees on private nonfarm payrolls increased by 10 cents, or 0.4%, to $23.13. Over the past 12 months, average hourly earnings have increased by 2.3%. In July, average hourly earnings of private-sector production and nonsupervisory employees increased by 8 cents, or 0.4%, to $19.52.

The change in total nonfarm payroll employment for May was revised from +25,000 to +53,000, and the change for June was revised from +18,000 to +46,000.

According to the US Department of Labor, in the week ending July 30, the advance figure for seasonally adjusted initial claims was 400,000, a decrease of 1,000 from the previous week’s revised figure of 401,000. The 4-week moving average was 407,750, a decrease of 6,750 from the previous week’s revised average of 414,500.

Advance Seasonally Adjusted Insured Unemployment Rate Remains Unchanged

The advance seasonally adjusted insured unemployment rate was 3.0% for the week ending July 23, unchanged from the prior week’s revised rate of 3.0%.

Advance Seasonally Adjusted Insured Unemployment Increases

The advance number for seasonally adjusted insured unemployment during the week ending July 23 was 3,730,000, an increase of 10,000 from the preceding week’s revised level of 3,720,000. The 4-week moving average was 3,729,750, an increase of 4,500 from the preceding week’s revised average of 3,725,250.

On May 9, 2011, the US Department of Labor (DOL) announced the launch of its first smartphone application, the “DOL-Timesheet” designed specifically for employees. In a DOL news release that same day, Secretary of Labor Hilda Solis stated that by leveraging “increasingly popular and available technology …this app will help empower workers to understand and stand up for their rights when employers have denied their hard-earned pay.” However, this tool can be problematic for small to mid-sized businesses. Employers need to take extra caution to ensure that employees are absolutely paid correctly, complaints are handled effectively, and recordkeeping is maintained accurately.

DOL Timesheet Currently Available for iPhone and iPod Touch

The free app is currently compatible with the iPhone and iPod Touch. The Labor Department will explore updates that could enable similar versions for other smartphone platforms, such as Android and BlackBerry, and other pay features not currently provided for, such as tips, commissions, bonuses, deductions, holiday pay, pay for weekends, shift differentials and pay for regular days of rest.

Learn More About the DOL Free Smartphone App for Your Employees

To find get more details about the DOL free smartphone App for our employees, be sure to read the featured article by the HR pros at MyHRSupportCenter, The US DOL’s Free Smartphone App…Made for Your Employees, Part I. If you’re not yet signed up or would like a free trial of MyHRSupportCenter, contact Vision Payroll today.