The Massachusetts unemployment insurance law (MUI) provides temporary compensation to those workers meeting the eligibility requirements of Massachusetts law. Most Massachusetts employers are required by law to pay contributions in the form of a tax (SUTA) to the Unemployment Insurance Trust Fund (the Trust). Monies from the Trust are used to pay unemployment benefits to eligible employees. Most Massachusetts employers that are liable for Massachusetts unemployment taxes are also liable for federal unemployment taxes (FUTA).
In accordance with the provisions of the MUI, Massachusetts’ unemployment compensation program is administered by the Department of Unemployment Assistance (DUA). The DUA collects unemployment insurance taxes, maintains the Trust and makes payments to eligible individuals. Contributions to the DUA are due 30 days after the end of every quarter. Contributions include SUTA, FUTA, Employer Medical Assistance Contribution (EMAC) and Workforce Training Fund Program (WTFP) as well as voluntary contributions and deferrals.
An employer’s contribution to the Trust is based on benefit/experience ratings, which relate the employer’s taxes to the cost of providing unemployment benefits to its employees. Employers who have fewer employees receiving unemployment benefits are subject to lower rates. Therefore, it is to the employer’s benefit to contest those claims that are without merit.
An employer doing business in Massachusetts must register for an unemployment insurance tax account once it employs one or more individuals performing services and pays wages of $1,500 or more. Employers can register online at:
Employers will need to have all of the following information available to register:
However, not all employers are subject to the taxing provisions of the MUI. Tax liability is determined by the type and nature of the business, the number of workers employed, and the amount of wages paid for services in employment.
There are four ways a private employer can become liable for unemployment taxes:
Special threshold categories exist for:
Specific threshold information can be found at:
An independent contractor is not eligible for unemployment compensation. Generally, if an employer has the right to control the manner and means by which the work is to be performed, the worker will be considered an employee. The DUA will presume each worker receiving wages to be an employee until proven otherwise. Relevant guidance is summarized below in the list of factors to be considered when determining a worker’s status:
Exempt employment includes:
Employers covered under the MUI are required to pay tax on the “taxable wage base.” For 2022, the taxable wage base is $15,000. Taxes paid are deposited in the Trust and monies from the fund are used to pay unemployment benefits to eligible employees. Each year, DUA mails to all active employers the Notice of Unemployment Insurance Contribution (Tax) Rate, which indicates the tax rate to be used for the coming year. Employers have 30 days to appeal their Notice of Unemployment Insurance Contribution (Tax) Rate if they believe an error occurred in calculating the rate.
Taxes are computed based on their rank within the “benefit ratio.” The benefit ratio refers to the employer’s average annual UI benefits paid for the past five years, divided by their average annual taxable payroll for the same five-year period.
The benefit ratio is a carrot-and-stick system. Employers who have a lot of unemployment benefits charged to their account have a higher ratio and as a result, a higher tax rate. On the other hand, if the employer’s payroll gets bigger (by raising wages or adding jobs), their ratio gets lower and results in a lower tax rate.
Employers’ ratios are then ranked into tiers from lowest to highest. Each tier is assigned a tax rate depending on which of the tax rate tables in effect during the given year. (MUI decides which tax table to implement based on how much money the Trust needs to collect; Table A collects the most tax and Table G collects the least.) The table in effect for 2022 is Table E.
Newly covered employers are assigned a contribution rate based on their rank on DUA’s annually adjusted benefit ratio rankings. For 2022, the newly subject employer rate for employers in non-construction industry is 2.42%. Construction employers are assigned a rate of 6.72%. These rates are subject to change annually.
A construction contributory employer includes those employers falling within certain classifications detailed in the North American Industry Classification System manual and generally includes employers involved in:
All other newly covered employers are considered non-construction employers.
After the first three years at a new employer rate, the DUA calculates an experience rating based on the reserve ratio method:
UI contributions owed are based on wages paid. Once an experience rate is assigned, that rate is applied to the wage base in effect during the year. The taxable wage base upon which employers must pay UI taxes is $15,000 for 2022.
To be initially eligible for UI benefits, a claimant must:
Employers are required to post a copy of the workplace poster "Information on employees' unemployment insurance coverage" (form 2553A) in a common employee area where it is visible to all staff. This poster can be found online:
Additionally, when an employee is separated from employment, regardless of the circumstance, it is the employer's responsibility to issue a copy of the DUA pamphlet entitled, How to Apply for Unemployment Insurance Benefits (Form 0590A) to the separating employee. A copy of the form can be found at:
The information must be distributed within 30 days of the separation to all permanently and temporarily separated employees. The information should be issued in person whenever possible, but can be mailed if in-person is not an option.
The maximum weekly amount of regular benefits payable to any claimant during a benefit year for 2022 is $974.
Because an employer’s benefit ratio and corresponding tax rate increases whenever a former employee receives benefits, it is to the employer’s advantage to contest those unemployment claims that are without merit. However, most claims for benefits are allowed and the employer has the burden to prove disqualification. Furthermore, protesting a claim for unemployment may drive ex-employees to consult attorneys, who may then raise other legal claims based on the employee’s termination or employment. Moreover, if the employer’s representative makes damaging admissions during the unemployment appeal process, these can be used against the employer in subsequent litigation. Thus, employers should carefully consider whether the benefits of protesting/appealing a claim outweigh the risks and costs of doing so.
For additional information on unemployment laws visit the Massachusetts Department of Unemployment Assistance website at:
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