labor lawAdivision of labor law center

Regular readers of this blog are keenly aware of the value of US Dept. of Labor WIRED grants in stimulating regional economies and eliminating pockets of high unemployment.

The national unemployment figures are good. According to the most recent national figures, unemployment hovers around 4% nationwide. Technically, any unemployment rate below 5% is considered a labor shortage by economists. For highly skilled workers including those with a college education, the rate is even lower – about 1.9% nationwide. Yet, there are still isolated areas of the US with high unemployment rates. That’s where unemployment grants come into play.

An Alabama unemployment grant would be great news for workers, particularly those in the northern part of the state, which has traditionally experienced high unemployment. In fact, just such a grant was awarded during the second round of WIRED grants. US Secretary of Labor Elaine L. Chao recently announced a competition for the third generation of WIRED grants. The program is called Workforce Innovation in Regional Economic Development Initiative, but almost universally referred to as WIRED grants.

According to Secretary Chao, “The WIRED Initiative recognizes that local economies often do not neatly conform to geographic boundaries,” She added, “WIRED brings together universities, businesses, community colleges, foundations and economic development organizations to help equip regional workforces with the skills needed to succeed in the 21st century worldwide economy.” In February 2006, the Labor Department launched WIRED through a competitive grant process in which 13 regions were selected to transform their economies. The WIRED grant process is highly competitive, but the rewards are also great.

As with previous WIRED call for proposals, this competition is open to all state or territory governors. All governors were sent a letter announcing the competition from the Labor Secretary. Each governor may submit up to two proposals, for grants up to $5 million each. Competing regions must identify sources of state, regional, and private funding to complement the Labor Department’s investment.

Everyone who collected Alabama unemployment during 2006 should have received a 1099 form by now. In the first month of this year, 1099 statements were sent out to anyone who received Alabama unemployment benefits during 2006.  The 1099 is, in a sense, the W-2 of a non-employee. 

 If you are considered an employee of a company, you are issued a W-2 after the close of each year.  Your taxes are withheld from your take-home pay, and that is recorded on your pay-stub and the W-2.  The 1099 records income such as unemployment benefits and any deductions that were made.  Deductions include child support and any other court ordered payments.

Did you know that your Alabama unemployment benefits need to be reported on your taxes?  If you did not elect to have federal or state taxes withheld from your benefit, like most people, you will have to pay taxes on the total amount received.  The 1099 reminds individuals of the exact amount paid to them, and taxes withheld if any.  If you did collect money for unemployment, you should have this form by now.  The Alabama Dept of Labor will help you promptly if you did not receive the 1099 for 2006 or previous years.

Other individuals who may have gotten a 1099 may not have received unemployment benefits.  This is not an error.  The statement may have come from a company that hired that individual for a temporary, project based, period, and did not consider them a regular employee.  Although not all employers provide this form when hiring short-term workers, many do.  The form is a specific record of income for independent contractors or freelancers.  It is in fact the same form distributed to those who used their unemployment benefits.  Typically, taxes are not withheld in such situations and individuals are liable for any taxes due on the income.

Governor Bob Riley announced on Friday that Alabama’s unemployment rate remains at a record low, unchanged from the previous month. The rate for November 2006 — the most recent data available – remained at 3.2 percent, unchanged from October. The unemployment rate set in October was a new record low in Alabama history.

“This record low unemployment rate continues to show that Alabama’s economy is vibrant and strong,” Governor Riley said. “Alabama is witnessing an economic surge and we will continue to help existing companies expand and recruit high paying jobs from the top companies in the nation and around the world.”

The number of employed Alabamians grew from 2,141,200 in October to 2,144,296 in November. The number of unemployed Alabamians changed from 71,204 in October to 72,025 in November.

The rosy Alabama unemployment picture was a factor in the re-election of Republican Governor Bob Riley in the mid-term elections.  A number of states including Colorado, Arkansas, Ohio, New York and Massachusetts voted Democratic Governors into office in 2006. Maryland Republican incumbent Robert Ehrlich was defeated by a Democrat.

The low Alabama unemployment rates were not new – they’re the continuation of a trend that started earlier in the year. In March, only seven states reported lower rates of joblessness than Alabama for March, while two others — South Dakota and Vermont — matched Alabama’s 3.3 percent unemployment rate.  Gov. Bob Riley called the 3.3-percent figure a “historic milestone.” Indeed, the 3.3 percent rate is the lowest recorded in the Yellowhammer state since 1976.

“The economy in Alabama is remarkable and it just keeps getting better and better. Our momentum continues to grow,” Riley said in a press release. “These numbers show Alabama is on the right track. Three years ago, Alabama was losing more jobs than it created. Now we’re headed in the right direction.”

A year ago—November 2005—the state’s unemployment rate stood at 3.6 percent. Alabama’s unemployment rate continues to remain lower than the national unemployment rate of 4.5%. Shelby County recorded the lowest county unemployment rate in the state at 1.9 percent. The highest county rate was 8.6 percent in Bullock County.

When an individual files a claim for benefits, two determinations are made. The first is a monetary determination of the amount of benefits the claimant may receive based on his/her wages paid in a specified time period (base period). The second is a non-monetery determination that considers the claimant’s eligibility for benefits and reason for separation from employment. Both determinations affect the charging of the employer’s account. The claimant, your employee, will learn about filing from the Alabama Unemployment Insurance Posters. Alabama Administrative Code 480-4-2-.19 requires that the Alabama Unemployment Insurance Posters be posted conspicuously so that all employees can see it.

The gross wages paid to a claimant by all employers in the base period are used in determining a claimant’s weekly benefit amount (WBA) and maximum benefit amount (MBA). An employer’s charging for benefits is based on the following elements.

1. Base Period Gross Wages Paid by the Employer - The base period is defined in Alabama’s Unemployment Compensation Law as the first four of the last five completed calendar quarters prior to the filing of the claim, and is used to establish eligibility for benefits.
2. Cost Ratio (Percentage) - If a claimant has only one employer in the base period, that employer’s account would be charged for 100% of the cost for benefits paid and chargeable. If the claimant had two or more employers during the base period, each employer’s liability would be determined by its percentage of the total gross wages paid by all base period employers.The percentage, times the total amount of benefits ultimately received by the claimant while unemployed, equal the employer’s benefit charges. The claimant will have learned from the Alabama Unemployment Insurance Posters the conditions that will allow him/her to receive benefits. The employer is notified of the exact amount of charges at the end of each calendar quarter. Benefits charged to the employer’s account may increase the employer’ tax rate and result in higher tax payments that will enable the Trust Fund to recover the benefits paid over a three year period.

The Alabama Unemployment Insurance Posters lets workers know that they are covered by the Alabama Unemployment Compensation Law.

The Alabama Unemployment Insurance Posters tells them that they will get benefits if they become totally or partially unemployed – meeting conditions defined by laws. The Alabama Unemployment Insurance Posters also will tell employees that they can receive benefits if they are separated from their job through no fault of their own. Finally, the Alabama Unemployment Insurance Posters will explain that if they leave their employment without good cause, they may not be able to get benefits.

Today I wanted to drop a couple lines about certain aspects of Alabama’s unemployment insurance and it’s employer contributions through taxes.

First, you must file quarterly reports with the Alabama State Government. This report is generated and made specifically for each business. You may not use your own payroll activity forms, or any other computer generated forms. You must use Alabama’s quarterly report forms they will provide.

Contribution and wage reports are due on the last day of the month following the end of the quarter. So due dates for each quarters would be as follows: January 31, April 30, July 31, and October 31.

Employer’s in Alabama are taxed for the first $8,000 they pay an employee each year. The taxes range from 0.20% to 6.80% based on four factors all relating to the unemployment claims from the company and other information. So in essence, those employers who have less employee’s severed or quitting for Unemployment Qualified reasons, will pay less than employer’s who have a lot of employee’s who have quit or otherwise severed from employment and are eligible for unemployment insurance protection.

All new employer’s can register as employer’s who have a liability in unemployment taxes (See below*), by filling out Form SR-2 available from the state of Alabama.

* Employer’s who are liable for unemployment tax contributions are any employer who employs one or more employee’s and has paid them $1500.00 or more during a period of twenty days. Note that this may not apply to farm workers, the self employed or those who work on commission. Also note that the twenty days do not have to be consecutive.