2021 Changes to State Unemployment
The COVID-19 pandemic has brought challenges and strains on all areas of the economy and employment. The Oklahoma Employment Security Commission (OESC) has recently announced that the state unemployment fund’s solvency has decreased considerably due to the record number of unemployment claims made during 2020. Because of this, the trust fund has been assigned the “Conditional Factor D” status, which brings with it the highest tax rates.
What is SUTA (State Unemployment Tax Act)?
The Employment Security Act of 1980 created a trust fund in which non-exempt employers contribute funds which can be accessed under certain conditions by unemployed individuals. Employers are assigned an experience rate that determines the amount they are required to pay into the fund. This experience rate is determined by an employer’s historical data in relation to employment. If a company lays off many employees or handles terminations incorrectly, their rate will be higher. A company that avoids layoffs and employee turnover, who files timely appeals, and has minimal unemployment claims will have a lower rate.
How will I know my SUTA Rate?
In Oklahoma, the OESC will provide each company with their rate for the next year on or before September 30. This rate is conclusive and binding unless the employer submits a written protest stating specific reasons for the protest within 20 days of date the rate was mailed.
What are the Major Changes for 2021?
Due to the status of the Oklahoma trust fund being designated as “Conditional Factor D,” the base rate has increased from 0.1% to 0.3% in 2021. In addition, the taxable wage limit per employee has increased from $18,100 to $24,000. This could result in significant SUTA tax increases for many employers. While these specifics relate to the Oklahoma unemployment tax rate, we believe other states will see the same type of increases.
Please contact us if you have questions regarding Oklahoma or other state unemployment tax.