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:
- Federal Employer Identification Number (FEIN)
- Social Security numbers, name, title and address of owners, partners, corporate officers or members of the business, as well as ownership percentages of the owners/members
- date employment began, and first wages paid date
- amount of wages paid to standard, agricultural, domestic employees or corporate officers during the current and preceding year
- number of weeks employees worked for you during the current or preceding year
- address for where work is performed in Massachusetts
- name and address of business you acquired, if applicable
- physical address(es) and type of work performed.
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.
Employers subject to unemployment tax
There are four ways a private employer can become liable for unemployment taxes:
- by virtue of having one more employees working on a permanent, temporary or part-time bases on one or more days in each of 13 weeks during a calendar year
- by virtue of the amount of wages it pays to employees performing services in Massachusetts ($1,500 or more)
- by acquiring all or substantially all the assets of a covered employer
- by being subject to federal employment tax (FUTA) and having employees perform services in Massachusetts.
Special threshold categories exist for:
- agricultural employers
- domestic employers
- out-of-state employers.
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:
- The individual is free from control and direction of the employer in the performance of the service.
- The service is performed outside the usual course of business or outside of all places of business of the employer.
- The individual is engaged in independently established trade of the same nature as the service performed for the employer..
Exempt employment includes:
- children under the age of 18 working for their mother or father
- an individual working for his or her spouse
- an individual working for his or her son or daughter
- services performed for certain religious organizations
- work-training experience administered by a nonprofit or public institution
- real estate brokers or insurance agents who work on a commission basis only (except industrial life insurance agents and governmental real estate brokers or salespersons)..
Tax rate and liability
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
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:
- building construction, land subdivision and land development
- heavy construction (except buildings), such as highways, power plants and pipelines
- construction activity by special trade contractors.
All other newly covered employers are considered non-construction employers.
Contribution rates for established employers
After the first three years at a new employer rate, the DUA calculates an experience rating based on the reserve ratio method:
- A reserve percentage is calculated by dividing the employer's account balance by the three-year wage average (subject to UI tax).
- The reserve percentage is applied to the annual rate scheduled currently in effect (schedule E for 2022) and the experience rate is determined for the coming year.
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.
Employee’s eligibility for benefits
To be initially eligible for UI benefits, a claimant must:
- have been separated from employment due to layoffs
- be totally or partially unemployed
- have lost his or her job through no fault of his or her own for reasons not related to deliberate misconduct or violation of an employer rule or policy
- have quit for reasons attributable to the employer, or for an urgent, compelling or necessitous reason.
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.
Maximum benefit amount
The maximum weekly amount of regular benefits payable to any claimant during a benefit year for 2022 is $974.
To protest or not to protest
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.
Where to go for more information
For additional information on unemployment laws visit the Massachusetts Department of Unemployment Assistance website at: