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Missouri Unemployment Insurance Update

December 31st, 2006 Posted by Mark

I think for the past few blogs we have done a good job of going over the two main steps that new employers must do to comply with the unemployment insurance system requirements in most states in the United States. Those were of course to register with your state’s system and to ascertain your liability for paying unemployment insurance benefits. And to acquire unemployment insurance posters for each and every one of your work sites and posting them prominently somewhere in the facilities where your workers could read them pretty easily and regularly.

But once you are set up in such a system, like Missouri’s unemployment insurance benefits system for instance, there are steps you can then take to make your compliance a little less costly and a little more efficient for your business.

When you start out in the Missouri unemployment insurance system, for example, you start by paying a fixed percentage of your employees’ salaries as a tax for unemployment benefits. In Missouri, this fixed rate is based on a Standard Industrial Classification, so new businesses of the same ilk all pay the same fixed rate starting out as employers. At this point, you as an employer cannot affect that rate. Good behavior cannot make it go down, and bad behavior will not make it go up.

After two to three years of this, however, you cease being a “new” employer in the eyes of the Missouri unemployment insurance system, and your rate becomes what is called an “experience” rate. This experience rate is based in part on how many of your former employees have made claims on the unemployment system. In other words, if you have a more stable work situation and have less employees getting laid off, you will have fewer former employees claiming unemployment benefits, and you will have a lower experience rate on your taxes. The vice versa is true as well, and your rate can go up if you have more layoffs and more employees claiming unemployment benefits.