Fall 2023 DOES Unemployment Insurance Quarterly Employer Newsletter

 

Stay in the know: The Fall 2023 issue of the DC Department of Employment Services (DOES) UI Tax Division’s quarterly employer newsletter is here!

This newsletter is designed to provide recipients with current information on their rights and responsibilities as District of Columbia employers. The unemployment insurance program in the District is administered by DOES in partnership with the US Department of Labor and is financed through taxes paid by employers doing business here. Employers must remain current and in compliance with their DOES obligations to receive the 5.4% credit against their Federal Unemployment Tax Act liability.

Statements contained herein are for informational purposes only and do not have the effect of law or regulation.

Reviewing the Basics: What is an Employer Tax Rate?

Employers new to the process of paying unemployment insurance taxes are assigned a standard tax rate. The standard tax rate that a new employer must pay is equal to the average of all the tax rates paid by all employers in the District during the preceding year, or 2.7%, whichever figure is higher. The standard tax rate for a particular year is the same for all newly registering employers.

Employers, other than those who are new to paying payroll taxes to the District, are rated based on the unique experience they have had with the District’s unemployment program. Please take a moment to review the Unemployment Insurance Handbook for Employers to learn more about the experience rating process.

Fraud Spotlight: SUTA Dumping

SUTA is an acronym for State Unemployment Tax Act, and “Dumping” refers to the unlawful actions of an employer aimed at paying Unemployment Insurance (UI) taxes at a lower rate. Instead of paying UI taxes at its Agency-assigned rate, which is based on its own experience with layoffs and payrolls, under this scheme, an employer attempts to avoid a higher rate by “dumping” its experience.

Most frequently, this involves merger, acquisition, or restructuring schemes, particularly those where the violator shifts the workforce/payroll from one business entity to another. The Office of Unemployment Compensation (OUC) has invested money and resources in employee movement detection software designed to identify potential SUTA Dumping offending employers. Similarly, the District has passed legislation that penalizes employers who knowingly withhold or provide false information regarding the transfer of workforce/payroll from one business entity to another. Penalties range from significantly higher UI tax rates to monetary fines or even imprisonment.

The best method to avoid being investigated and/or identified as a SUTA Dumping offender is to inform the Office of Unemployment Compensation-UI Tax Division when any change promptly and voluntarily in your business occurs. You may use the uitax.info@dc.gov email to communicate any of the following to the OUC-UI Tax Division. Please be readily available to provide any requested follow-up information:

• Change in the name of the legal entity;
• Change of designated legal or third-party representative;
• Change of address, phone number, or email address;
• Acquisition of another business, partial or total; and
• Change of ownership or business organization (e.g., change from sole proprietorship to partnership), merger, acquisition, and/or business closure.

 

Reporting Method Pivot: As a nonprofit 501(c)(3) employer, is it advantageous to register as a Reimbursing rather than a Contributory employer?

Reimbursing employers choose to reimburse the UI Trust Fund for benefits paid to their employees instead of paying quarterly taxes. It is essential to note, however, that only employers qualifying as nonprofit organizations under Section 501(c)(3) of the Internal Revenue Code and government entities have the option of reimbursement.

Reimbursement essentially functions as a form of self-insurance. Upon making the Reimbursing election, eligible employers are required to pay each quarter an amount equal to the benefits paid to their former employees. Reimbursing employers submit quarterly payroll reports, similar to Contributory employers, including the universal administrative assessment fee of 0.2% on the taxable wage base of $9,000. They do not, however, include payment with their reports. Instead, a bill is sent each quarter listing the benefits charged to their account. The bill is payable within 30 days of the mailing date, and interest and penalties are assessed for delinquent payments.

Please be aware that if you qualify as a 501(c)(3) organization and intend to opt for the Reimbursing reporting method, you must make this election at the time your liability is established and during your initial registration with the Agency. Additionally, please note that if you select the Reimbursing option, it must remain in effect for a minimum of two calendar years before switching to the Contributory reporting method.

 

Shared Work is a voluntary program offered by the DC Department of Employment Services that provides an alternative to layoffs for employers facing a decline in business. The principle behind Shared Work is simple: instead of laying off a percentage of your business’ workforce to cut costs, your business could reduce employees’ hours by the same percentage and keep your entire workforce on the job.

Shared Work offers many benefits to you as an employer. Through this program, your business maintains high productivity and quality because your existing trained workforce remains in place. This means that your business can avoid the time and expense of hiring and training new employees. Shared Work also allows your business to maintain high employee morale because your employees will avoid the insecurity and uncertainty that an impending layoff could bring.

Moreover, participation in Shared Work would allow your business to continue to provide health and retirement benefits for your employees. Instead of facing the emotional and financial hardships of unemployment, your employees would be able to keep their jobs.

Before considering a layoff, think about the Shared Work Program. Please click here to visit our dedicated Shared Work webpage. For a downloadable overview of the process from start to finish, please click here.

For any additional questions, please contact us at Shared.Work@dc.gov. If you feel that Shared Work is right for your business, you can conveniently apply online.

 

Useful Links

Employer Self-Service Portal (ESSP)

UI Tax Division Forms

DCETS Modernization Frequently Asked Questions

 

Contact the UI Tax Division:

(202) 698-7550 UITax.info@dc.gov