---

To Employers

---

About Our Web Site

---

What is the purpose of the Utah Employment Security Act?

---

Base Period Wages Defined

Base period wages used in establishing a claim are the wages paid in the first four of the last five completed calendar quarters prior to the filing of the claim. If an individual lacks enough wage credit to qualify during this time, an alternate base period of the last four completed quarters may be used.

---

Who pays for Unemployment Insurance?

---

Who is subject to the Employment Security Act?

You are subject if you meet any one of the following:

1. An individual or employing unit that employs one or more individuals for some portion of a day during a calendar year.
2. You acquired your business from an employer who was subject to this Act.
3. You are a nonprofit organization exempt from income tax as provided by Section 501(c)(3) of the Internal Revenue Code and employ four or more individuals for some portion of a day in each of 20 different weeks during a calendar year. This Department requires a copy of the Internal Revenue Service letter of exemption, 501(c)(3), in order to be recognized as a nonprofit organization and to elect to become a reimbursable employer.
4. You pay cash wages of $1,000 or more in a calendar quarter to a worker who performs domestic service (household employment).
5. You employ agricultural workers and pay total wages of $20,000 or more in a calendar quarter or have more than ten employees in 20 different weeks during the calendar year. If you are an employer of a domestic service worker or an agricultural worker or a 501(c)(3) entity and meet the criteria of a subject employer, you are a subject employer for the calendar year regardless of the quarter you met the criteria. You also become subject for the next calendar year. For example, an agricultural employer who pays wages in excess of $20,000 in the third quarter of 2012 becomes a subject employer effective January 1, 2012. This employer remains subject for all of 2012 and 2013 regardless of the amount of wages paid in the other quarters of 2012 and 2013.
6. You are an officer of a corporation receiving remuneration for services rendered.
7. You are considered to be an employer subject to the Federal Unemployment Tax Act (FUTA). FUTA coverage is based upon the employer’s annual calendar year payroll. If an employer is subject to Utah law by virtue of being subject to FUTA, all payroll is subject and reportable in all quarters regardless of the payroll amounts You are an employer according to FUTA if you:
1. Paid wages of $1,500 or more in any calendar quarter
   or
2. Employed one or more workers at any time in each of 20 calendar weeks.

---

What are wages?

Wages in the Act are the same as "currently defined by Title 26, Section 3306(b), Internal Revenue Code of 1986." Additional information can be found in IRS Publication 15, Circular E, Employer Tax Guide and the Web site for The U.S. Tax Code Online contains a detailed description of the definition of wages at:

http://www.fourmilab.ch/ustax/www/t26-C-23-3306.html (case sensitive)

Wages include:

Wages do not include:

1. Any payment made to, or on behalf of, an employee under a cafeteria plan. This exclusion is limited to any "qualified (non-taxable) benefit" provided under a cafeteria plan as defined by Section 125 of the Internal Revenue Code. However, employee contributions made under a 401(k) plan are wages subject to the Utah Employment Security Act and must be reported.
   
2. Meals and lodging provided on the employer’s premises and for the employer’s convenience if a good business reason exists for providing them. Good business reasons include the following:
   
1. To have employees available at all times or for emergencies.
2. Employees have a short meal period.
3. Adequate eating and lodging facilities are not otherwise available.
3. Payments made by the employer to a group of individuals in his employ into a fund to provide for:
1. Medical or hospitalization expense
2. Death of an employee; provided the employee does not have the right to any portion of money placed in the fund at termination of the plan, or if the employee terminates employment with this employer.
4. Reimbursement and advances for bona fide, ordinary and necessary employment related expenses. DWS may require an accounting of the actual expenses or may determine whether the expenses are reasonable and necessary.
5. Employment related training allowances (Example: school tuition and fees). However, payments for services performed as part of the training, such as on-the-job training, are wages.
6. Remuneration paid to directors of a corporation for director services (i.e., attending board of directors meetings). Director services do not include managerial services or other services that are part of the routine activities of a corporation.
7. A fee paid to an individual for the referral of a potential customer (finder’s fee) provided that the transaction is in the nature of a single or infrequent occurrence and does not involve a continuing relationship with the person paying the fee.
8. Supplemental Unemployment Benefits (SUB) if they meet the requirements specified in Internal Revenue Service Revenue Ruling 56-249, 58-128 and 60-330. Because of the complexity of the factors involved, employers should request a declaratory ruling from DWS on their specific SUB plans.

---

What wages must be reported to Workforce Services?

All gross wages for each individual who worked for you during a calendar quarter must be reported online each quarter. However, the Act establishes a maximum taxable wage base that is recalculated annually. No contributions are assessed on any wages paid to an employee that are in excess of this taxable wage base. This taxable wage base is recalculated each year based on changes in the state average annual wage. (See Appendix F.)

---

When are wages reportable?

Wages must be reported for the calendar quarter in which they are paid, unless you are a domestic employer who has elected annual reporting. The “Due Date” is the last day of the month following the end of the calendar quarter. “Wages paid” are those wages actually received by the worker or constructively paid without regard to the ending date of the pay period, provided the payment is not delayed beyond customary payment practices of the employer, contractual agreements between employer and the workers, and state laws. Wages “constructively paid” are wages that should have been paid. For example, the pay period for the business is March 15 through March 30. The pay day is the following April 15th. If the wages are not paid to the employee on April 15th, they should have been and hence have been constructively paid. These wages need to be reported on the Employer’s Quarterly Contribution Report for the second quarter and can be used by the employee if they file a claim for unemployment benefits.

---

What is employment?

“Employment” means all work performed for you by persons (regardless of age) whom you pay, whether their work is permanent or temporary, part-time or full-time, unless the work is specifically exempted from coverage by the provisions of the Act. Employment includes services performed by officers of a corporation including “S” corporations.

Wages of an individual employed to perform or assist in performing the work of an employee are reportable by you for unemployment insurance purposes. An individual is deemed to be engaged by the employee’s employer if the employer had actual or constructive knowledge of the work performed by the individual. This is the case even when the individual is hired or paid by the employee. An employer is deemed to have constructive knowledge if they should have reasonably known or expected their employee to engage another individual.

Interstate Employment

Wages are reportable to Utah if:

1. The service is performed in this state. Service is considered to be Utah employment if it is performed entirely within Utah. The service is also considered to be Utah employment if performed both inside and outside of Utah, but the service outside of Utah is incidental to the service in Utah.
2. The service is not localized in any state. If the service is not localized in any state but some of the service is performed by the employee in Utah, the entire service is covered in Utah if one of the following conditions apply:
1. The employee’s “base of operations” is in Utah (the “base of operations” is the place the employee physically checks in on a regular basis),
2. The employee has no base of operations in Utah but is controlled and directed from basic authority which exists in Utah and the employee does some work in Utah,
3. The employee's residence is in Utah and a or b above do not apply, or
4. If a, b, or c do not apply, the employer may elect the state where the employee is covered by making the election under provisions for reciprocal coverage (Section 35A-4-106 of the Act).

---

Professional Employers' Organization and Temporary Service Employers

---

Common paymaster and payrolling

• Who has the right to hire and fire the employee;
• Who has the responsibility to control and direct the employee;
• For whom the employee performs the service.

---

What employment is exempt from coverage?

Provided the services are also exempted under the Federal Unemployment Tax Act (FUTA) employment shall not include:

1. Domestic service in a private home, fraternity or sorority if the total cash remuneration for personal services is less than $1,000 per quarter in each quarter of a calendar year. Unless in the prior year, you paid wages of $1,000 or more in a calendar quarter.


2. Agricultural labor as defined by the Act provided that the employer pays less than $20,000 per quarter, in each quarter of a calendar year, for agricultural labor and does not have 10 agricultural employees in each of 20 weeks during that year. Unless in the prior year, you paid wages of $20,000 or more in a calendar quarter or you had 10 or more agricultural employees in each of 20 weeks during that year.


3. Services performed by an individual owner (proprietor) and the owner's spouse, parent(s) or minor child (under age 21).


4. Services performed by a general partner. A worker who bears an exempt relationship to all general partners (a minor child in a husband and wife partnership, for example), would also be exempt.


5. Services performed by a member of a limited liability company (LLC), unless the LLC chooses to report for IRS purposes as a corporation thereby becoming subject to FUTA.


6. Licensed real estate agents, licensed insurance agents, and licensed security brokers paid on a commission basis. Hourly wages or salaries paid to these individuals are not exempt.


7. Salespersons not working on the employer’s business premises who are paid only by commission and are free from the employer’s control and direction.


8. Private duty registered or practical nurses, if the nursing service is performed in the patient’s home and if substantially all the compensation is from health insurance proceeds. This exemption does not apply if any of the compensation or fee is paid to a nursing service business.


9. Pollsters or telephone survey conductors if the individual does not perform the service on the employer’s premises, and the individual is paid for the service solely on a piece-rate or commission basis.


10. Casual labor but only if it is not in the course of the employing unit’s trade or business.

---

Guidelines for Employments Status (Independent Contractors)

1. The individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the contract of hire for services; and
2. The individual has been and will continue to be free from control or direction over the means of performance of those services, both under the individual's contract of hire and in fact.

• Separate Place of Business. The individual worker has his own place of business separate from that of the employer.
• Tools and Equipment. The individual worker has a substantial investment in the tools, equipment, or facilities customarily required to perform the services. “Tools of the trade” such as those used by carpenters, mechanics, and other tradespeople do not necessarily demonstrate independence.
• Other Clients. The individual worker performs services of the same nature for other customers or clients and is not required to work full time for the employer.
• Profit or Loss. The worker can realize a profit or risks a loss from expenses and debts incurred through an independently established business activity.
• Advertising. The worker advertises services in telephone directories, newspapers, magazines, the internet, or by other methods clearly demonstrating an effort to generate business.
• License. The individual has obtained any required and customary business, trade or professional licenses.
• Business Records and Tax Forms. The worker files self-employment and other business tax forms required by the Internal Revenue Service and other tax agencies.

• Instructions. A worker who is required to comply with another person’s instructions about when, where and how they are to work is ordinarily an employee. This factor is present if the employer for whom the service is performed has the right to require compliance with instructions.
• Training. Training a worker by requiring an experienced person to work with the individual, by corresponding with the individual, by requiring the individual to attend meetings, or by using other methods, indicates that the employer for whom the services are performed expects the services to be performed in a particular method or manner.
• Pace or Sequence. A specific requirement that the service must be provided at a pace or ordered sequence of duties imposed by the employer indicates control and direction. However, mere coordinating and scheduling of the services of more than one worker does not indicate control and direction.
• Work on Employer’s Premises. A requirement that the service be performed on the employer’s premises indicates that the employer for whom the service is performed has retained a right to supervise and oversee the manner in which the service is performed, especially if the service could be performed elsewhere.
• Personal Service. A requirement that the service must be performed personally and may not be assigned to others indicates the right to control or direct the manner in which the work is performed.
• Continuing Relationship. A continuous service relationship between the worker and the employer indicates that an employer-employee relationship exists. A continuous relationship may exist where work is performed regularly or at frequently recurring although irregular intervals. A continuous relationship does not exist where the worker is contracted to complete specifically identified projects, even though the service relationship may extend over a significant period of time.
• Set Hours of Work. The establishment of set hours or a specific number of hours of work by the employer indicates control.
• Method of Payment. Payment by the hour, week or month points to an employer-employee relationship, provided that this method of payment is not just a convenient way of paying progress billings as a part of a fixed price agreed upon as the cost of a job. Control may also exist when the employer determines the method of payment.

---

What must an employer pay?

An employer who is subject to the Act is required to pay contributions to the Utah Unemployment Compensation Fund (trust fund) on a quarterly basis (annual election for domestic/household employers). These contributions (unemployment taxes) are determined by multiplying the total subject wages for all employees each quarter by the employer’s assigned contribution rate.

The entire amount of contribution (tax) must be paid by the employer. The Act provides penalties for employers who deduct any part of the contribution from the earnings of the employee.

Payment should be made by Electronic Funds Transfer (EFT) at https://jobs.utah.gov/ui/Employer/Login.aspx.

---

How is the contribution rate calculated?

New Utah employers are assigned a rate based upon the average rates of all employers in their respective industries. An “earned” rate based upon payroll and benefit experience is assigned January 1 of the year following their first full fiscal year (July 1 through June 30) of reporting.

The unemployment insurance contribution “earned” rate for rated or qualified Utah employers is determined from the experience each employer has accumulated over previous years of coverage in the Unemployment Insurance Program. Utah’s law calls for a “benefit ratio” to be determined for each qualifying employer. This means that unemployment insurance benefits paid to your former employees will be used as the primary factor in calculating your contribution rate. These payments are known as benefit costs.

Benefit costs for your former employees will be charged to you in the same proportion as the wages paid by you in the claimant’s base period year to the total wages of all employers of that individual worker in his base period. For example, if 50% of your former employee’s earnings during his base period year have been paid by you, then 50% of the unemployment benefits paid to this former employee would be charged to your account.

When an individual files a claim for unemployment benefits, all base period employers are notified that a claim has been filed on Form 606, “Employer Notice of Claim Filed” and informed of the potential benefit costs that may be charged against them. Any protest of a claimant’s eligibility for benefits or request for relief of benefit cost charges based on the reason for separation of the employee must be made at this time. Relief will not be granted if you do not protest when first notified by Form 606.

As benefits are actually paid, you will receive a quarterly, Form 66, “Statement of Employment Benefit Costs.” (This information can also be found on our web site under Display Benefit Costs.) Your benefit costs for a minimum of one year and up to the last four fiscal years (July 1st through June 30th), will be used in the computation of your contribution rate for the following calendar year.. If the benefit costs charged to your account are inconsistent with a prior decision or action that was or should have been taken by DWS, you may request that corrections be made. The request must be filed in writing within 30 days of the date of the quarterly statement.

Your overall contribution (tax) rate will be determined for each year by the following four factors:

1. Benefit Ratio (basic tax rate): This rate is determined by dividing total benefits paid to your former employees by the total taxable wages reported to DWS by you during the same period of time. The last four completed fiscal years will be used in determining the contribution (tax) rate. New employers are assigned a basic contribution rate equivalent to the two-year average benefit cost ratio of their major industry, but not less than 1%.
   
   

Benefit costs charged to your account can be viewed on our web site under Display Benefit Costs.



2. Reserve Factor: This is an adjustment to the basic contribution rate (an increase or decrease) which is necessary to maintain an adequate reserve in the Utah Unemployment Compensation Fund.
   
3. Social Tax Rate: This rate is determined from the benefit costs which cannot be allocated to any particular employer. This rate is added to the contribution rate for all employers. Examples of benefit costs which are considered to be social costs include:
1. Benefit costs of employers who have gone out of business without having successors.
2. The state’s share (50%) of benefit costs which result from the payment of federal extended benefits paid during periods of high unemployment.
3. An employer’s benefit costs which exceed the maximum contribution (tax) rate plus the social costs.
4. Benefit costs from which employers have been granted relief.
5. Uncollectible benefit overpayments.
4. Rate Surcharge for Delinquent Payments: The Act provides for a surcharge of 1% of taxable wages in addition to the overall contribution rate for employers who have not paid all contributions for the fiscal year (July 1st through June 30th) prior to the January 1st computation date.



The surcharge will be removed in the quarter in which all delinquent contributions for the prior fiscal year (July 1st through June 30th) have been paid.

The overall contribution rate is calculated as follows:

The employer contribution rates are calculated early in December for the following calendar year after all benefit and social cost data have been finalized. You will be notified in writing of your assigned rate and the factors used in determining your rate for the upcoming calendar year. An annual domestic employer’s rate may be modified at a later date.

---

What is SUTA dumping?

The Legal References Behind SUTA Dumping
Congress passed the SUTA Protection Act of 2003 to ensure that state unemployment insurance (SUI) rates are fair for all employers. The State Unemployment Tax Act contains provisions (refer to the Act 35A-4-304 or the Rule 994-304) that govern the transfer of employment experience and the assignment of rates.

Background
The State Unemployment Tax Act (SUTA) contains provisions banning two common forms of SUTA dumping which are best described as tax manipulation schemes. In the first, a new company buys an existing company to obtain its lower rate. In the second, a new company is created to which employees are transferred in order to dump an existing employer’s past history and higher rate. Without a new DWS rate calculation, either version may represent SUTA dumping when common ownership, management, or control of business practices exists.

Controlling SUTA dumping protects all employers who otherwise would need to pay more in unemployment insurance to maintain the solvency of the trust fund. Employers who engage in this practice are not allowed to abandon benefit costs or its associated state unemployment insurance (SUI) rate. Instead, the businesses for such an employer would share the higher, combined rate. SUTA dumping also may expose the employer to both civil and criminal penalties and to a higher, punitive rate.

Special Provisions Regarding Transfers Between Entities With Common Ownership, Management or Control
If an employer transfers its trade or business (including its workforce) or a portion of its trade or business to another employer and, at the time of the transfer, there is common ownership, management or control of the employers, then the unemployment experience attributable to each employer shall be combined and both entities will have the same UI contribution rate for up to four years. The Act provides meaningful civil and criminal penalties for all individuals, including tax advisors, who knowingly violate or attempt to violate this provision of the Act.

Complying with the Law
To ensure compliance with the law, visit the DWS website to obtain a Form 1 (See Appendix A for an example). As an alternative, call us and we will fax the form. This form asks for percentages of the business being transferred and to whom. After receiving this form, DWS will calculate the SUI rate. This also will ensure that the employer’s account number is retained rather than creating an unnecessary, new one. If you have questions or concerns about moving payroll, please contact this department at 801-526-9235 or 800-222-2857 and select option 3 for either number.

---

What does it mean to be a "Successor" employer?

“Successor” is the employing unit which acquires substantially all of a business and “predecessor” is the employing unit which last operated the business. For the purposes of rate computation, all of the predecessor’s payroll and benefit costs will be transferred to the successor if the successor has acquired the business or all or substantially all of the assets of the predecessor business and the predecessor has ceased to operate subsequent to the acquisition.

To “acquire” the assets means to now possess, control, or have the right to use the assets by any legal means such as by purchase, gift, lease, or sub-lease, repossession, change in the form of ownership, inheritance, or foreclosure. It is not necessary to purchase the assets in order to have acquired the right to their use, nor is it necessary for the predecessor to have actually owned the assets for the successor to have acquired them.

Additionally, as a successor employer, you assume the liability for any unpaid contributions owed by your predecessor. It is your responsibility to withhold a sufficient amount of the purchase money to cover the amount of any contribution, interest, and penalty that may be due to DWS from your predecessor prior to the transfer.

We recommend that you obtain access to your predecessor’s payroll records in order to furnish DWS with wage and separation information on individuals employed by your predecessor prior to the transfer. This allows you the opportunity to request relief of charges, based on the separation, and reduce the potential liability against your account.

---

Information an Employer Must Provide to Employees?

As an employer subject to the Act, you are required to post the “Unemployment Insurance Notice to Workers” poster in a conspicuous place in each work place or establishment. The purpose of this poster is to provide workers with initial information regarding their rights to unemployment benefits. Please telephone (801) 526-9235 or toll free 1-800-222-2857 and select option 9 to obtain these or other DWS forms.

---

What records must an employer keep?

In order to complete the required reports and verify this information at a later date if necessary, your records must contain the following information:

1. The name and social security number of each employee.
2. The date each employee was hired.
3. The place of employment.
4. The date and reason each employee was separated from employment.
5. The beginning and ending date of each pay period and the date wages were paid.
6. The total amount of wages paid (in each pay period) showing wages separately from other payments such as tips and bonuses.
7. Daily time cards or time records kept in the regular course of business.
8. Special payments such as bonuses, commissions, gifts, severance pay or accrued leave pay.
9. The cash value of living quarters, meals, or anything else paid to an employee as compensation for work done.

In general, you are required to keep these records for four (4) calendar years (see Utah Code 35A-4-310).

---

Audit of Records

DWS has the responsibility and authority to audit your records periodically. A DWS representative may contact you to examine your records. In most cases, an appointment will be arranged at a mutually satisfactory time.

---

What reports/forms must an employer submit?

Most of our reports/forms may be accessed on our web site at https://jobs.utah.gov/ui/Employer under public tax forms..

Reports most frequently required are:

1. Status Report, Form 1 (See Appendix A). This report allows you to register your business and gives the information necessary to determine whether you are subject to the Act. All new or acquired businesses must submit this form. A new Status Report will also be required for an existing account if the entity or ownership of the business has changed. Necessary changes can then be determined from the information acquired. This form may be downloaded from our web site or is available on request.
   
   

   You may also register your business online at https://jobs.utah.gov/ui/Employer/EmployerRegistration/. You will receive an account number, PIN number, and rate at the end of your registration. Once your account has been finalized by a status examiner, you will be able to access any of our confidential services.

   
   

   Account changes may be completed online by accessing our confidential services. If you prefer, you may notify us of changes to your account such as the type of business activity your firm engages in and changes of address or site location of your business in writing. However, a change in entity or ownership will require you to register the new business or entity. Our address is:

   
   

   Department of Workforce Services
   Attn: Employer Accounts • PO Box 45288
   Salt Lake City, UT 84145-0288



2. Employer's Quarterly Wage List and Contribution Report
   

   Once subject to the Employment Security Act, an employer must file the Employer's Quarterly Wage List and Contribution Report online each calendar quarter. Our website contains the combined report and payment option. Each employer must send quarterly wage contribution reports even if wages are not paid during the quarter until DWS closes the account or determines that the employer is exempt from reporting requirements.

   
   

   Online filing is the required reporting option. Employers must submit these reports with the contributions due within 30 days following the end of the quarter.

   
   

   If you are a domestic employer, you will be given the option to file quarterly or annually. If you choose to file annually, your report is due January 31st of the following year in which you had wages. The report is broken down by quarter.

   
   Online Filing for Quarterly Contributions and Wages
   

   Online filing is a fast, secure method for you to report wages and will automatically and accurately calculate your tax liability. Data can be manually entered or you can upload a file.

   
   

   For screenshots on how to log into your account, add an existing business, and access the online filing option, click here.

   
   Manual Entry
   

   The first quarter you file online, you will need to enter the individual's First Name, Last Name, and Social Security Number. For all subsequent quarters, this information will automatically populate with details from the previous quarter. To delete employees that are no longer employed, use the button on the left-hand side and to add new employees use the button in the center of the page. The screen will look like this:

   
   
   Upload A File
   

   Microsoft Excel (when submitting reports for one employer at a time)
   Each file must have five columns: First Name, Last Name, Social Security Number, and Quarterly Wage Total. An example of a valid Excel file is below:

   
   
   
   * Please note: The above example shows a middle initial. The middle initial field is not required.
   After the file is uploaded, you will be taken to the Manual Entry screen listed above to confirm the information.
   Excel File Upload Tips
   
   If you encounter problems uploading an excel file try saving it as an Excel 97-2003 workbook. To do this:
   • On the File tab click on the 'Save As' button.
   • A new window will open with two drop down boxes labeled as 'File name:' and 'Save as type:'
   • In the 'Save as type:' box, click on the drop down and choose the 'Excel 97-2003 workbook' option.
   • Then click on the 'Save' button in the lower right hand corner.
   • You can now follow the upload procedures as outlined.
   
   Try deleting any additional worksheets. To do this:
   • Open your file and locate the worksheet tabs on the lower left hand side.
   • Right click with your mouse on the sheets that do not contain any data.
   • You will see a small window open and from the list of options choose 'delete'.
   • This will remove the additional worksheet and you can now follow the upload procedures as outlined.
   
   If you have a problem uploading a file with Social Security numbers that begin with a '0', you can change the format of the column to correct the issue. To do this:
   • Right click on the header for the column and select 'format cells'.
   • On the number tab, select 'Text' as the number format and click 'ok'.
   • This should resolve the problem.