Reemployment Tax Rate Information

When a new employer becomes liable for reemployment tax, the initial rate is .0270 (2.7%) and will stay at that rate until the employer has reported for 10 quarters. The account will then be rated by dividing the total benefits charged to the account by the taxable payroll reported for the first 7 of the last 9 quarters immediately preceding the quarter for which the rate is effective.

The only exception is for employers liable by succession who choose to accept the tax rate of the previous employer, along with the responsibility of paying any outstanding amounts due. At that time, a tax rate will be calculated using the employment record and the rating factors, which are built into the Reemployment Assistance Law.

The maximum tax rate allowed by law is .0540 (5.4%), except for employers participating in the Short Time Compensation Program. The 5.4% rate can be earned, or it can be assigned to employers who have delinquencies greater than one year and to those employers who fail to produce all work records requested for an audit. By law, an employer's tax rate may not be lower than .0010 (.1%). Rate notices are mailed to all contributing employers each year. You may appeal your tax rate within 20 days from the date printed on the Reemployment Tax Rate Notice (Form RT-20).

The minimum and maximum tax rates, effective January 1, 2019, are as follows (based on annual wages up to $7,000 per employee):

  • Minimum rate: .0010 (.1%) or $7.00 per employee
  • Maximum rate: .0540 (5.4%) or $378 per employee

You can view your tax rate by logging in to the Department’s Reemployment Tax file and pay website.

How Rates Are Calculated

The reemployment assistance program is a federal-state partnership. Each state determines benefit qualification levels and amounts, benefit duration, disqualifications, and tax structure, within federal limits.

For example, federal guidelines require each state to:

  • Base its tax structure on benefit experience
  • Have a new employer tax rate of at least 1.0%
  • Have a maximum tax rate of at least 5.4%
  • Have a taxable wage base of at least $7,000

Each state sets tax rates, benefit levels, and trust fund balances based on that state's needs. Each state has its own benefit trust fund account within the U.S. Treasury. In Florida, the account is funded by a tax paid by employers.

Florida assigns new employers an initial tax rate of 2.7%. This rate stays in effect for the first 10 quarters. At the end of this period, an employer has enough history to qualify for an experience-based tax rate. The formula for calculating the rate combines three major factors:

  1. The individual benefit ratio makes up the greatest portion of the employer's final tax rate. This ratio is calculated by dividing the previous three years of benefit charges for former employees by the taxable payroll for that same three-year period. The benefits charged and the size of the payroll have a direct effect on the employer's tax rate.
    • The timely reported taxable payroll uses up to $8,000 for each employee prior to 2015 and up to $7,000 for each employee thereafter.
  2. The variable adjustment factor (multiplier) is made up of three ratios that spread the costs among employers that have had benefit charges in the three previous years.
    • The last three years of non-charged benefits (those not attributable to any employer).
    • Excess payments (the portion of benefit charges which exceed the maximum rate of 5.4%).
    • The fund size factor, which, depending on the amount in the trust fund, may affect the tax rate. If the amount in the trust fund is between 4% and 5% of the previous year’s taxable payroll, no adjustment factor is made to the tax rate. If the balance in the trust fund is below 4% of the previous year's taxable payroll, a positive adjustment factor is computed each year until the fund balance equals or exceeds 4% of the previous year’s taxable payroll. A positive adjustment factor will increase tax rates. If the balance in the trust fund is above 5% of the previous year’s taxable payroll, a negative adjustment factor is computed each year until the fund balance is less than 5% of the previous year’s taxable payroll. A negative adjustment factor will decrease tax rates.
  3. The final adjustment factor spreads costs not included in the second factor to all employers whose rates are not at the initial or maximum rate. This factor is also distributed among employers who had no benefit charges in the preceding three years. This factor determines the minimum rate for the tax year.

Ideally, each employer would pay the exact amount of reemployment assistance benefits that are chargeable to his or her account. This is not possible because the maximum contribution rate is 5.4%, and sometimes benefit payments are not charged to a specific employer. These added costs are divided among all rated employers through the variable adjustment factor and the final adjustment factor. Each employer's contribution rate is his or her benefit cost, plus a share of unassigned costs. This keeps the reemployment assistance program solvent.

Protecting Your Tax Rate

Employers can help reduce tax rates by providing complete and accurate information needed to determine a claimant's eligibility for benefits.

Improper payment of benefits is a serious problem that has a financial impact on employers. Here's how you can prevent improper payments and protect your tax rate:

  • Report all new and rehired employees to the Florida New Hire Reporting Center by the due date, as required by federal law. Timely reporting helps prevent improper payment of benefits after an individual has returned to work.
  • Respond promptly to any Request for Verification of Weekly Earnings. Verifying earnings ensures that the correct amount of reemployment assistance is paid for weeks of partial unemployment.
  • Provide complete and accurate employee separation information. The employer's timely response to the Determination Notice of Reemployment Assistance Claim Filed (Form UCB-412) is used, in part, to determine the claimant's eligibility for reemployment assistance.

Employers who do not comply with state and federal requirements for providing employee information risk higher costs through increased taxes, fines, or penalties.

For questions about benefit eligibility and payment, contact the Florida Department of Economic Opportunity, Reemployment Assistance Program at 800-204-2418.

Mandatory Transfer of Experience

If an employer transfers all or part of its business to another employer and, at the time of the transfer, there is any common ownership, management or control of the two employers, the unemployment experience attributable to the transferred business must be transferred to the employer to whom the business is transferred. (Note that Florida law defines “business” to include the employer’s workforce/employees).

If the transfer was made with the intention of obtaining a lower reemployment tax rate (referred to as State Unemployment Tax Administration [SUTA] Dumping), a penalty rate of 2% of taxable wages shall be added to both employers’ rates for three years. In addition, an intentional violation of this provision makes it a felony of the third degree.

Payrolling

Payrolling is an agreement between employers where one employer agrees to report the payroll of another employer for reemployment tax purposes. Each employer maintains direction and control of their workers and the businesses do not change. The only change is that the payroll of one employer is reported to the Department by another employer for convenience.

Florida law requires each legal entity to report only its own employees, therefore, payrolling is not permitted. It is essential under Chapter 443, Florida Statutes, that each employer report only its own employees to ensure the accuracy and integrity of the employer’s reemployment tax rate.