labor lawAdivision of labor law center

In Montana, getting back to the way that tax rates are formulated to charge new employers for their unemployment insurance, new employers are also charged a new employer tax rate when they first operate and remain open for three years. That new employer tax rate is actually based each year on the average tax payments of employers in similar industries in the last year. So you start out by paying what your competitors have been paying in the previous year.

It also stands to reason that as the industry average goes up and down over the course of your three years as a new employer, your new employer tax rate will also go up and down to match. So as a new employer in the state of Montana, your new employer unemployment insurance tax rate will not stay static. You just have to hope that your competitors don’t go out and lay off a few thousand folks while you are starting up your business!

As an employer in the state of Montana, however, there are also other taxes that you have to pay during the course of doing business in the state. One of these taxes is the State Unemployment Insurance Contributions tax, which is the one that we are most familiar with (because we have been talking about it for the last how many blog entries). This is the standard unemployment tax that goes to paying unemployment benefits to people who are laid off or let go by their employers.

Another tax employers in Montana have to pay is the Administrative Fund Tax. This tax keeps the Department of Labor and Industry operating up to snuff, and pays for the operations of the Job Services office as well. For most employer in Montana, this tax amounts to about .0013 of your taxable wages. You pay out this tax every quarter, and each quarter the amount could be different depending on how much wages you have paid out that quarter.

The third tax that goes along with Montana’s unemployment insurance system is the Federal Unemployment Tax Act Tax. This tax goes straight to the Internal Revenue Service, and helps to run Montana’s unemployment insurance system.

If you are an employer subject to the state unemployment insurance (UI) law, you are a “covered” employer and you, the employer, must pay UI taxes. It is against the law to take UI taxes out of your employees’ wages, as stated on Montana Unemployment Insurance posters.

Montana’s Unemployment Insurance program is financed by employers through a payroll tax. Employers pay the contribution tax based on gross wages paid to their employees for services performed in Montana. Montana Unemployment Insurance posters help workers determine it they are employees or simply contractual labor.

The Unemployment Insurance contribution rate varies depending on the employer’s industry and experience rate. Employers are also liable for paying an administrative fund tax, which, for most employers, is computed at 0.13% of taxable payroll. Governmental agencies and non-profit organizations who elect to reimburse the Unemployment Insurance trust fund pay the administrative fund tax at 0.05% of total payroll.

Any year you meet the criteria for a covered employer, you must report all wages paid for the entire year (retroactively to January 1) and all wages paid in the next calendar year regardless of the amount of wages in the second year.

You are a “covered” employer if you meet one or more of the following criteria: (1)Your total annual payroll for the current or preceding calendar year equals or exceeds $1,000. (Total payroll is all wages paid to all employees before deductions.) (2)You acquired all or part of a business already subject to MT Unemployment Insurance (3) You are subject under the Federal Unemployment Tax Act (FUTA) (4) You employed agricultural workers and paid $20,000 or more in cash for agricultural labor in any quarter during the current or preceding calendar year (5) You employed 10 or more workers in agricultural labor in 20 different weeks during the current or preceding calendar year and/or (6) You employed domestic (or household) workers and paid $1,000 or more in cash for domestic services in any quarter during the current or preceding calendar year. Companionship services are not considered domestic employment.

If you are a covered employer, you have the obligation to post Montana Unemployment Insurance posters in locations visible to your employees.

I found some information on Montana Unemployment Insurance that I think is very helpful. Unemployment insurance, as you probably know, insures you so that you can get payments, called benefits, if you become unemployed. You can file for unemployment benefits if you are totally unemployed or if you are working less than 40 hours in a week. In Montana, your claim starts in the week you file the claim.
 

Be prepared to give your name, address, and information about your last job and dates of employment. You can apply either online or in person. If there are issues on your claim, you may be required to provide detailed information about these issues to the Customer Service Representative or enter this information into the Internet application form.
 

The amount of benefits you receive is dependent on your base pay period, which is the first 4 of the 5 previous quarters. The interesting thing, and the part that makes Montana a little different from other states, is the way the qualifying wage is calculated. To qualify, your pay must be 1-1/2 times more than the highest quarter of your base period or 7 percent of the average annual wage. Or your wage can be 50 percent of the average annual wage in Montana. The average annual wage changes yearly. It is calculated each July. In July 2005, the average annual wage was $27,060.71.
 

People who are injured in an on-the job injury and are not able to meet the requirements for unemployment benefits can usually use an alternative base period to calculate their eligibility.
 

In addition to the monetary eligibility, Montana has something they call non-monetary eligibility. That’s an issue that prevents you from receiving benefits, like if you quit the job for no reason or if you were fired for misconduct. If you don’t have childcare or transportation, or if you don’t actively seek work, you might not receive unemployment benefits.