Do Business Owners Need To Pay Unemployment Insurance

To begin, let’s delve into the context of unemployment insurance in Wisconsin.

This piece centers on the viewpoint of employers regarding unemployment insurance, specifically within the framework of Wisconsin state law.

Not addressing extended unemployment provisions from CARES Act for those separated from employment seeking broader eligibility benefits.

Since federally funded, the CARES Act provisions minimally impact employers.

Based on our observations, separated employees usually apply for benefits under the CARES Act without employers being informed or involved.

Do I need unemployment insurance for my business
Do I need unemployment insurance for my business: Photo source (

What is unemployment insurance?

UI, or UC, provides weekly wage replacement benefits to eligible individuals facing job loss.

In Wisconsin, the administration of UI falls under the purview of the Department of Workforce Development (DWD).

Explore KEW’s blog post for insights into the behaviors that could potentially render an employee ineligible for UI benefits — “To what extent can an employee’s actions lead to a denial of UI benefits?

Who is eligible for unemployment insurance?

Claimant eligibility relies on capability, readiness for employment, no personal fault in separation, and possessing an adequate work history.

To assess sufficient work history, we examine an individual’s base period, which includes the first four of the five most recently completed calendar quarters.

The quarter in which the claim was filed is excluded.

In certain situations, we may consider alternative base periods.

How much will the employee’s weekly benefit rate be?

The weekly benefit rate is equal to 4% of wages paid by employers in the highest quarter.

The minimum weekly benefit rate is $54, which requires earnings of $1,350 in the highest quarter, and the maximum weekly benefit rate is $370, which requires earnings of $9,250 in the highest quarter.

For how long can an individual receive UI?

Currently, in Wisconsin, an individual may receive UI for up to 26 weeks in any given benefit year.

How is unemployment insurance funded?

Employers, rather than all taxpayers as commonly believed, contribute to the funding of unemployment insurance through federal and state payroll taxes.

Wisconsin employers follow the state’s Unemployment Insurance law, contributing specific payroll taxes to the fund through a designated formula.

Employer reserve funds cover benefits for former employees, and Federal Unemployment Tax (FUTA) helps with administrative expenses.

Also read: How Much Is Insurance For a Limo Business

Under the Unemployment Insurance Law, what does the employer need to do?

Wisconsin employers must establish a DWD unemployment insurance account, submit reports, and display mandatory posters, including one for seasonal employers.

How much will an employer be liable in UI for any given employee?

If a single employer paid all the wages during the base period, they are fully responsible for the employee’s UI benefits.

If there are multiple employers, each contributes based on their proportionate share of wages, except if an employer’s share is less than 5%, they may be exempt from contributing in most cases.

Will an employer be notified of an individual’s UI claim?

Certainly. An employer eligible for UI benefits will get Form UCB-701, detailing potential benefits during the liable period.

If benefit payments are charged to the employer’s account, they receive Form UCT-14384 weekly for account charge notifications.

What if I disagree with a determination that a previous employee should receive UI benefits?

An employer has the right to contest the eligibility of an employee for unemployment insurance (UI) benefits.

Challenges may arise, citing reasons like termination due to substantial fault or voluntary resignation.

After a former employee submits a UI claim, the employer receives a Separation Notice from the Department of Workforce Development to contest termination reasons.

Do I need to pay unemployment insurance for everyone in my company, including myself?

Typically, employers must pay UI payroll tax for all employees, but certain businesses and officers may qualify for a corporate officer exclusion.

For eligibility, the corporation needs a UI payroll under $500,000, files the election for principal officers by March 31, and hasn’t excluded officers previously.

Despite being a one-time submission, companies should consult a tax professional before opting out, as it may not be financially beneficial for all.

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