What is my responsibility?

The Massachusetts Unemployment Insurance Law, Chapter 151A of the General Laws of the Commonwealth, places certain obligations on all employing units - individuals, firms, organizations and governmental units which employ one or more persons. Your responsibilities fall into two general areas: financing the unemployment insurance (UI) program and participating in the determination of eligibility.
 

What is my liability if I purchase a business or assets of a business?

When you engage in a purchase and sale, asset purchase, acquisition/merger or transfer of assets/business with another entity operating in Massachusetts you must disclose this information to the DUA since the information is required under the law. This information is used by the DUA to make a determination on your entity's subjectivity to the Unemployment Insurance Law.

Please note that under the law {MGL Chapter 151A, Section 8(d),14N,14(n)(1)} the experience rating account balance {and the rate associated with said balance} of a predecessor organization might be transferred to your entity if the DUA determines successorship- as defined under the above cited sections of the law-occurred. As the successor, you would be liable for any past or future benefit charges attributable to the predecessor's account. Benefit charges are only one factor used in the calculation of an employer's contribution rate for unemployment purposes. Further information on how rates are calculated is available on this website.

Which employers are covered by the law?
In general, if you have people working one or more days in each of 13 weeks during a calendar year, or if you pay wages of $1,500 or more in any calendar quarter, you are liable for contributions under the law. The weeks of employment need not be consecutive, nor must the employees remain the same. In deciding whether an employer is liable for contributions, DUA considers such factors as:

  • The entity (company) for which services are performed.
  • The degree of direction and control you have over the way an employee's services are performed.
  • Where the work is performed, whether entirely or only partially in Massachusetts.
  • The exempt nature of certain classes of employment.

As an agricultural employer, you are subject to the law if you paid total cash wages of $20,000 or more in any calendar quarter, or you employed 10 or more individuals on any day in each of 20 weeks in a calendar year.

If you employ domestic workers and paid $1,000 or more in cash wages in any calendar quarter, you are liable. This category includes private homeowners, clubs, college fraternities and sororities.

Employers can appeal decisions regarding whether or not they are subject to the law; and whether or not an employer/employee relationship exists in terms of determining eligibility for unemployment insurance. As with all appeal rights under the UI program, these are covered in detail on the forms sent to you when this type of determination is made.

When do I first become subject to the law?
If you are a new employer, or if you have not done business in Massachusetts before, you must notify DUA immediately by filing an "Employer Status Report" (Form 1110), enabling DUA to establish your employer account and assign you a DUA identification number.

What option is available for not-for-profit or governmental employers?

If your entity is a not-for-profit or governmental employer, you may elect the alternate payment in lieu of contributions method of funding. For further information, please go to Financing Unemployment Insurance - Options for Non-profit or Governmental Employers (Form 2024 pdf format of    Financing UI: Non-Profit /Government Employees  ). This fact sheet describes the two options available for your organization; the reimbursable and the contributory methods.

What is my contribution rate if I am a new employer?
The initial contribution rate for new employers without an unemployment insurance history is set at the positive reserve percentage of 10.5 and less than 11.0 for the current schedule. Therefore, this rate changes any time the schedule changes. New employers in the construction industry (NAICS Code 23) are assigned the average rate of employers in this NAICS code. This "new employer rate" remains in effect for two years and then experience rating begins.

What is experience rating?
DUA uses a system of credits and debits to determine the balance in your account. When you pay your quarterly contribution, that amount is entered as a credit to your account on the actual date paid, with the exception of the final quarter, when a payment made by October 31 is credited as of September 30. Your beginning account balance is established on October 1 each year.

When DUA provides benefits to a worker you employed during the past year, these benefit charges become debits to your account.

How are state contributions calculated?
Your quarterly state contribution is "experience rated." How much you pay depends on a variety of factors, including the size of your payroll; the number of employees; the amount of unemployment insurance benefits charged against your account; and the amount of reserves in your account and in the Massachusetts unemployment compensation fund.

Your contribution rate is applied to certain wages paid by you to each employee in any calendar year.


How is unemployment insurance financed?
State UI payments are due quarterly, within one calendar month from the end of each quarter. For government or non-profit employers using the reimbursable method, benefit charges are billed monthly and payable within 30 days.

Payments are determined by both an individual employer experience-based contribution rate applied to certain wages and an annual statewide schedule based on a comparison of the balance in the trust fund to the state's total payroll. Under special circumstances, the schedule may be set by law, overriding this calculation.

How is the annual statewide contribution schedule determined?
Each September, the state's unemployment compensation trust fund balance is divided by the total payroll for all employers, yielding the fund's "reserve percentage."

This reserve level, by law, determines the following year's contribution schedule. In some cases, the reserve level calculation may be overridden by legislation.

How is my individual contribution rate established?
In addition to determining the statewide schedule for the coming calendar year, DUA calculates contribution rates for individual employers. Each year in January, you will receive a "Notice of Unemployment Insurance Contribution Rate" (Form 9701-V) with your annual rate and the data used to calculate it.

For most employers, the contribution rate is determined by your experience rating account balance. The ending balance of your account is updated each October as DUA takes into account the following:

  • Your account balance based on the immediately preceding twelve months of activity
  • Plus the contributions you paid
  • Less the benefits charged to your account
  • Less the statewide "solvency assessment" charged to your account. (See explanation below.)

This net balance is kept on a cumulative basis and is compared annually to the portion of your payroll subject to the Unemployment Insurance Law to yield your "reserve percentage." This reserve percentage is used to determine your contribution rate by applying it to the schedule in effect for the calendar year.
 


The state maintains a solvency account to finance benefits that cannot be charged to a specific employer - such as dependency allowances, approvable voluntary separations and benefits paid against accounts whose reserves have been depleted. Your account balance is adjusted upward or downward with an annual "solvency assessment." Similar in concept to "no fault" insurance, this mechanism distributes the account's deficit or surplus proportionally among all employers. Interest earned on the trust fund balance is credited to this account. If you believe a computation error has been made in your contribution rate, you may request an administrative review of the rate determination from the DUA Experience Rating Department. This request must be made in writing, within 60 days of receipt of the rate notice. If you have any questions, contact the Experience Rating Department at (617) 626-6895.

What is my liability if an employee files a claim for benefits?
Your benefit charge liability as an employer is normally limited to 36 percent of the wages paid to your employee during his or her base period, generally the first four of the last five completed calendar quarters preceding the effective date of the claim.

DUA first charges the account of the most recent base period employer, and when that employer's 36 percent limit is reached, begins charging the next-most-recent employer's account, and so on throughout the base period.

What if I don't agree with the charges for a claim?
For each month during which charges are made to your account, you will receive a "Statement of Benefit Charges" which itemizes all charges, credits and adjustments made for each week of the month, and identifies each employee by name and Social Security number. Check this form against your records; it is important to verify each benefit charge to protect yourself against fraud, processing errors or other improper charges. An individual might have returned to work, for example, or have had partial earnings during the week in question.

If you believe a charge is incorrect and should be removed from your account, use the first page of the form to file protest within 30 days of the mailing date shown on the form. Benefit charges will not be removed from your account if you failed to provide separation and/or wage information within the 10-day limit, or if you failed to protest via the "Statement of Benefit Charges" form within the 30-day limit.

DUA will notify you of the action taken. Credits appearing on the form will be indicated by a "minus" sign and will show the name and Social Security number of the employee for whom the original charge was made. You may direct questions in this area to the Employer Charge Section at (617) 626-6350

What are my responsibilities when a worker files a claim?
When an unemployed worker files for benefits, the employer's participation is required in order for DUA to make accurate and timely UI benefit determinations.

One indicator of eligibility is earnings, which must meet a minimum amount. Wage information that employers report quarterly to the Massachusetts Department of Revenue is the primary source for determining eligibility. Individual requests for wage data are required if a claimant is determined ineligible using quarterly information.

In addition, employers must furnish DUA with the cause for the employee's separation. Be sure to keep payroll and time records in a form that enables you to provide them to DUA to determine:

  • The wages paid to each employee on a calendar-week basis (Sunday through Saturday).
  • Whether any week's earnings were for less than full-time employment.
  • Whether lost time was due to an employee's lack of availability for work or inability to work.

You must make and keep copies of all reports filed with DUA, as well as all work sheets and other back-up data used in preparing the reports, for a period of four years from the filing date. During this period, an authorized representative of DUA should be able to inspect these records at any reasonable time. The information you supply is confidential and for the exclusive use of DUA in the administration of the Unemployment Insurance Law. Upon request, a worker or representative may obtain information concerning only his or her claim records.

Because the timely determination of valid claims is an important priority for employers and claimants, deadlines have been established for a variety of actions, responses, requests and protests within the insurance program. Although exceptions are sometimes allowed for good cause, failing to meet these deadlines may cause you to forfeit important rights.

What other responsibilities do I have?
Informing workers of the availability of unemployment insurance is the responsibility of all employers. You must clearly post a copy of the DUA poster "Information on Employees' Unemployment Insurance Coverage" (Form 2553-A) pdf format of    Information on UI Benefits  , which informs employees of their right to file unemployment insurance claims under the Unemployment Insurance Law. This poster is also available in five languages in addition to English.

You must give all employees who are separated from work for seven or more days a copy of the pamphlet "How to File for Unemployment Insurance Benefits " pdf format of    How to Apply for Unemployment Insurance Benefits  file size 1MB (Form 0590-A). This form provides DUA with accurate information on your organization name, your address (where payroll records are kept) and your DUA employer account number, which helps expedite the filing of claims.

You must also notify the DUA TeleClaim Center if:

  • You anticipate a mass separation of employees; i.e., 10 or more workers will be laid off for seven days or more. This notification should be given at least 48 hours prior to the layoff.
  • A worker is recalled to work after a layoff but fails to report. You should notify the DUA TeleClaim Center.
  • A work stoppage due to a labor dispute has occurred. This notice, given within 48 hours after the beginning of the stoppage, should supply the details and the number of employees involved.
  • Your mailing address changes.


What if I need to change my address?
Maintaining an accurate mailing list helps DUA serve you more efficiently. Generally, DUA mails all forms to the address you supplied when you originally requested a DUA identification number. These forms include:

  • Requests for separation and/or wage information
  • Notice of approved claim
  • Notice of reopened claim
  • Statement of benefit charges
  • Statement of reimbursable benefits

If you wish, DUA can mail various forms to different addresses. Send your change of address requests to:

Department of Unemployment Assistance
Revenue Service
Employer Liability Division, 5th Floor
19 Staniford Street
Boston, MA 02114

Please be specific about which forms you want sent to a particular address, and include your DUA employer number on all correspondence.

How can I verify my account number?
To verify your employer number - which is required on most of the DUA forms - call (617) 626-5075.

Can I use an agency to process UI claims?
DUA will work with an employer's agent to process UI claims if the agent represents the employer in both wage and separation matters. To establish your agent with DUA, written notice must be sent to the:

Department of Unemployment Assistance
Revenue Service
Status Department, 5th Floor
19 Staniford Street
Boston, MA 02114

For further information, call (617) 626-5075.

Am I required to file contribution reports every quarter?
You are required to file reports electronically with DUA until you cease doing business in Massachusetts, even if you employed no workers or paid no wages during a quarter. If your business changes in any way (new ownership, incorporation, partnership, out of business, etc.), you must notify DUA in writing immediately. To assist DUA in verifying data, you must keep copies of all reports and supporting data on file for four years.

Each report should include only the information that pertains to that quarter, which may include any carry-over contributions due from a prior quarter if you chose to take a deferral. If you discover an error in a previous report, notify DUA at (617) 626-5090, and a form for correcting the error will be mailed to you.

If you fail to file for a quarter, the law allows DUA to estimate the amount of contributions you owe from any information available, and to assess and collect contributions, penalties and interest for any quarter for which reports are not received.

What happens if I don't pay the contributions I owe?
When employers fail to pay their unemployment insurance contributions, all employers lose. DUA has strong enforcement powers, and the agency places emphasis on using these powers to prevent and reduce the amount of overdue contributions:

  • Prosecution of individuals and principals in corporations by the attorney general's office for failure to file or pay unemployment insurance contributions.
  • A minimum $10,000 fine, up to $50,000 maximum, for each quarter and/or a state prison sentence for a felony conviction on contribution evasion charges.
  • A minimum $2,500 fine, up to $10,000 maximum, for filing but failing to pay unemployment insurance contributions.
  • Levies on both a delinquent employer's bank account and state or local government funds owed to the employer after a court judgment and formal notice.
  • Liens on real estate.
  • Assistance from the state Department of Revenue in locating employers not registered with DUA.
  • Civil complaints brought by DUA attorneys.
  • Suspension of a delinquent employer's liquor license after a court judgement and a hearing.
  • Ongoing, random audits of employer accounts to see if all workers and wages were properly reported.
  • After notification, public disclosure through the publication of a list of delinquent employers owing more than $5,000.
  • Penalties and fines for evasion of payment of contributions and failure to report the employment status of employees.

How can I avoid problems?

  • Manage your UI costs like any other business cost. Forecast and budget for likely contributions due.
  • Monitor monthly statements of benefits charged to you. Review these statements for accuracy and as a possible source for detecting fraud - you may know that a former employee has returned to work although you are still being charged for benefits.
  • Hire smart. Invest time before hiring to get the best workers. Check their work histories and references. Workers who are discharged because they lack the ability to do a job are not disqualified from collecting benefits under the law.
  • Explore every alternative prior to separation. Consider retraining, reassignment, advance notice, time off for a job search, referrals to other firms, or job placement assistance from DCS.
  • Document the circumstances surrounding each separation for reasons other than lack of work, so you'll be prepared to furnish DUA with accurate information promptly.
  • Participate in DUA's decision whether to award or deny benefits to one of your former employees.
  • File for an appeal if you believe that DUA awarded benefits to a claimant who does not qualify under the law.
  • Call back separated workers if work becomes available. Certified mail is the best way to do this. Let DUA know if you recall an employee who does not return to work.
  • Hire other UI claimants through your local Career Center, which lowers overall disbursements from the state trust fund.

 

 

Questions About the Rate Notice

What is my company's UI Tax Rate?
Rate notices are mailed early in January to all private contributory Massachusetts employers. The notices inform each employer of their individual UI tax rate for the forthcoming year and detail how each company's individual tax rate was computed.

Your tax rate can also be obtained by visiting UI Online for Business. In order to obtain your rate online you'll need to register. The registration process ensures that your confidential account information can only be viewed by you. Registration takes time as you must wait to receive, sign and return an authorization form. Alternatively, contact DUA at 617-626-6895.

How is my individual tax rate determined?
The method used in setting each employer's tax rate is based on "experience rating". Basically, this means that the amount of unemployment contributions a company pays-based on the company's assigned contribution rate-is related directly to the amount of unemployment insurance benefits paid to its workers.

DUA maintains an account for each enrolled employer. UI taxes paid by you are credited to your account and benefits paid to former employees are debited against your account. Each year on September 30 DUA balances employer accounts. The net balance of your account is divided by the total taxable wages paid to your employees during the year to determine your "reserve percentage". Your reserve percentage determines the tax rate assigned for the following year.

Employers can have a negative reserve percentage when former employees have received more in unemployment benefits than the employer has paid into the Unemployment Insurance Trust Fund.

Newly formed businesses in Massachusetts receive a rate set by statute for the first two years. New construction employers receive a rate equal to the average rate in the industry.


Can I dispute my individual tax rate?
Individual tax rates are set as required by law and may not be appealed. The unemployment contribution rate notice sent to each employer in January provides information on your account which you should review and check against your own records. Your account's starting balance as of October 1 of the previous year, the amount of contributions paid during the year and the benefits paid to your former employees can all influence the rate which you are assigned. If any of the figures relating to these transactions differ from your own records, contact DUA's Accounts Control Unit by fax at (617) 523-4882, by mail at: DUA; Accounts Control Unit, 19 Staniford Street, Boston, MA 02114, or by phone at (617) 626-6893.

What is the solvency assessment?
The state maintains a general account known as the "solvency account" which is used to finance benefits that are not chargeable to an individual employer account. These include charges for dependency allowances, benefits paid to individuals who leave employment for what are considered to be an urgent or compelling personal reasons, additional benefits paid to claimants who are in approved training programs, and benefits paid and charged to accounts whose reserves have been depleted. This mechanism distributes appropriate costs proportionally among all employers.

All contributing employers are required to pay the additional solvency assessment. In addition interest earned on the unemployment insurance trust fund balance is also credited to this account.

A reserve percentage is determined for the solvency account in the same way one is determined for individual employer accounts. For the solvency account, the formula used is the ratio between the closing balance of the account and the total taxable payrolls of all employers for the prior calendar year.


What is the Workforce Training Fund contribution?
The Workforce Training Fund awards matching grants to employers to provide training for their incumbent workers. All employers contribute to the fund at the same rate.

What are voluntary contributions and how can payment of a voluntary contribution reduce my tax rate?
Eligible Massachusetts employers with an experience rated account can choose to pay voluntary UI contributions. This program allows the state's businesses to manage their unemployment insurance costs by paying additional contributions in order to increase their account reserve percentage and reduce their UI tax rate for the forthcoming calendar year.

A voluntary contribution can be enough to reduce your rate to the next lowest rate, the lowest rate on the rate table currently in effect, or any rate in between. Your rate notice includes account specific information indicating the amount of a voluntary contribution you will need to make in order to obtain the next lowest rate on the schedule. Additional information on voluntary contributions is available on this site.

Additionally, DUA has developed an online voluntary contributions calculator for employers. The calculator will allow you to select lower rates and will provide you with the amount of the voluntary contribution you will need to pay in order to secure the lower tax rates for your company. You will need your rate notice when using the calculator.

Employers who are delinquent in filing and paying their UI contributions, interest, surcharges or penalties are not eligible to make a voluntary contribution. If your company has any unpaid obligations to DUA, you may file any outstanding reports, pay the amount owed, and then choose to pay voluntary contributions. This must all be completed by a specific due date each year. Any outstanding debt must be paid separately and cannot be included with your voluntary contribution payment. Employers whose accounts are not experience rated and employers who are at the lowest rate on the schedule are not eligible for the voluntary contribution program.

Where can I get a copy of the Rate Schedule?
A copy of the rate schedule is included with the rate notice mailed to each employer and is also available on this site.

How can I manage my Unemployment Insurance costs?
Manage your UI costs like other business costs:

  • Forecast and budget your quarterly contribution payments.
  • Monitor monthly statements of benefits charged to you. Review these statements for accuracy.
  • Report to DUA if one of your former employees has returned to work although you are still being charged for benefits. DUA is serious about preventing the fraudulent collecting of UI benefits.
  • Explore every alternative prior to separation. Consider retraining, reassignment, advance notice, time off for a job search, referrals to other firms, or job placement assistance from DUA.
  • Document the circumstances surrounding each separation for reasons other than lack of work, so you'll be prepared to furnish DUA with accurate information promptly.
  • Participate in DUA's decision whether to award or deny benefits to one of your former employees.
  • Appeal DUA decisions if you believe that benefits were awarded to a claimant who does not qualify under the law.
  • Call back separated workers if work becomes available. Certified mail is the best way to do this. Let DUA know if you recall an employee who does not return to work.
  • Hire smart. Invest time before hiring to get the best workers. Check their work histories and references. Workers who are discharged for poor performance-because they lack the ability to do a job-are not disqualified from collecting benefits under the law.
  • Hire other UI claimants through your local One-Stop Career Center. This lowers overall disbursements from the UI trust fund.