UC Issues Update Newsletter
Winter 2013
Volume 16 | Number 4
In This Issue...

Mandatory Electronic Filing Begins With First Quarter 2014 Filing

Effective with the first quarter 2014 filing, employers are required to electronically file quarterly UC tax and wage reports through Unemployment Compensation Management System (UCMS). The Department of Labor & Industry (L&I), will not be mailing UC-2 and UC-2A forms to employers for any filing period that begins on or after Jan. 1, 2014, unless a waiver has been requested and approved by the department.
 
Employers and third party administrators (TPAs) can access UCMS at www.paucemployers.state.pa.us or at www.dli.state.pa.us and by clicking on the UCMS logo logo.
 
To file, employers must use one of the following options:
 
For employers reporting fewer than 100 employees:
  • Key online (Employee information can be pre-populated making it easy to file.)
  • File Upload
  • FTP
For employers reporting 100 or more employees:
  • File Upload
  • FTP
Employers that do not file electronically for filing periods that begin on or after Jan. 1, 2014, may be assessed a penalty of 10% of quarterly contributions due for the period, for a minimum of $25 and a maximum of $250.
 
Employers that are unable to comply with the electronic filing requirements must complete a waiver request form indicating the reason and length of time that a waiver is required. The request must be returned to the address on the form. The department will review the request to determine whether the employer has shown good cause for the waiver.
 
A quick reference guide, tips for using file upload or FTP and a presentation to help understand the employer tax portion of UCMS can be found at www.dli.state.pa.us by clicking on "Employers," "Unemployment Compensation" and then "UC Management System."
 
If you have questions, please contact the UC Employer Contact Center at 866-403-6163 or, within the Harrisburg area at 717-787-7679, weekdays from 8 a.m. until 4:30 p.m., Eastern Standard Time. To ensure proper handling of your inquiry, please be prepared to provide the name of your business and your PA UC account number.

Recent UC Legislative Change - Save Money;
Help Us Prevent Improper Payments

When an individual applies for UC, the department sends a request for separation information to the employer. One cause of improper UC benefit payments in Pennsylvania is inaccurate, untimely and incomplete separation information from the claimant and/or the employer.
 
Under Act 75 of 2013, signed by Governor Corbett on Oct. 23, 2013, if an individual is overpaid UC benefits because the employer or agent of the employer failed to respond in a timely or adequate manner to a request by the department for information regarding the individual's eligibility for compensation, the employer's account will no longer be credited when the overpayment is established.
 
Untimely Response = A response filed more than 14 days after the department's request for information is mailed or transmitted electronically to the employer or agent.
 
Inadequate Response = A response that misrepresents or omits facts that, if represented accurately or disclosed, would have been a basis for the department to disqualify the individual from receiving compensation.
 
Employers are also encouraged to provide their contact information to separated employees on Form UC-1609(P), Employer Information Form, which can be found by clicking on the Employer tab at www.uc.pa.gov. If a separated employee files for UC benefits, providing this form to the employee upon separation will help to make sure that the department's requests for information are sent to the correct employer address so that a timely response can be made.

Refusal of Suitable Work

Has your business offered a job to an applicant who is receiving UC benefits, and the applicant refused the offer?
 
Section 402(a) of the Pennsylvania UC Law provides, in part, that an employee shall be ineligible for compensation for any week in which his/her unemployment is due to failure, without good cause, to accept suitable work; provided that the employer who offers the work notifies the department of the refusal within seven days from when the offer is made.
 
The department has created a new form, UC-1921W, Employer Questionnaire Refuse Suitable Work, to assist employers to provide the required notification that suitable work was refused.
 
Be an active partner in helping to improve UC payment integrity. Notify the department within seven days of the offer using the UC-1921W form found here, or by clicking on the Employer tab at www.uc.pa.gov.

JobGatewaySM Continues Employer Improvements

You may already know that JobGatewaySM (www.jobgateway.pa.gov) gives employers access to a state-of-the-art website used by upwards of 300,000 active job seekers. However, L&I is committed to continuously improving the JobGatewaySM website. JobGatewaySM was introduced in July 2012 as the department's labor exchange website for job seekers and employers in Pennsylvania. Employers can use JobGatewaySM to create or upload job postings for free, easily search the talent pool and connect with candidates at no cost, automatically receive candidate recommendations and have your job posting recommended to candidates who match the posting criteria.
 
On Dec. 6, 2013, the following additional enhancements were made to employer functionalities on the site:
  • The job posting process has been enhanced and streamlined, allowing you to post jobs with "less clicks" and more user-friendly displaying of data.
  • You can save your search, including filter and facet information, allowing you to quickly re-execute the candidate search each time you visit JobGatewaySM.
  • Results of saved searches can be emailed to you and you can set the frequency (daily or weekly).
If you haven't visited JobGatewaySM lately, now's the time to stop by and see all that it has to offer.

How Will Unemployment Claims Affect My Contribution Rate?

If an employer qualifies for an experience-based contribution rate, the employer's rate is a reflection of the employer's UC history from the date the employer became subject to the UC Law. An experience rate takes into consideration wages paid by the employer and reported to the department, contributions paid to the UC Fund and benefits that are charged to the employer's reserve account.
 
Under the UC contribution rate formula, benefits charged to an employer's account put upward pressure on the employer's rate for subsequent calendar years. The extent that UC benefit charges may affect an employer's rate depends on the amount of the charges in relation to other values that have a favorable impact on a contribution rate. If the amount of the benefit charges is high in comparison to the size of the employer's payroll or the amount of contributions the employer has paid to the UC Fund, the benefit charges will have a greater impact on the employer's rate.
 
One component of an experience rate is the "reserve ratio factor." This is the ratio of an employer's reserve account balance to his average payroll for the most recent three fiscal years. The higher the reserve ratio, the lower the employer's rate. An employer's reserve account balance is determined by subtracting the benefits charged to the employer from the amount of contributions paid by the employer, over the lifetime of the employer's UC account. Benefit charges decrease the employer's reserve account balance and lower the reserve ratio, which can result in a higher contribution rate.
 
Another rate component is the "benefit ratio factor." This is the ratio of the employer's average benefit charges to his average payroll, both for the most recent three fiscal years. The higher the benefit ratio, the higher the employer's rate. Benefit charges directly increase the benefit ratio and thus can raise the employer's contribution rate.
 
The benefit ratio factor looks only at benefit charges for the most recent three fiscal years. Therefore, benefit charges cease to affect the benefit ratio factor when they are no longer within this three fiscal year period. However, the reserve account balance is a lifetime figure. Benefit charges never leave the calculation of the employer's reserve account balance, but their impact can be diminished over time if the employer's future contributions exceed future charges.

Important UC Tax Facts for 2014

The Office of UC Tax Services mailed the Pennsylvania Contribution Rate Notice for calendar year 2014, Form UC-657, on Dec. 31, 2013. Employers who received their 2014 UC Contribution Rate Notice with this mailing date will have the following important tax deadlines:
  • Jan. 30, 2014, is the last day to file a timely Voluntary Contribution to lower the 2014 contribution rate. (A Voluntary Contribution must be filed within 30 days from the mailing date of the UC Contribution Rate Notice or no later than April 30, 2014, whichever is earlier.)
     
  • March 31, 2014, is the last day to file a timely rate appeal to the contribution rate reflected on the UC Contribution Rate Notice. (A timely rate appeal must be filed within 90 days of the mailing date of the UC Contribution Rate Notice.) Please note that the surcharge adjustment, additional contributions and interest factor are not appealable items.
     
  • April 30, 2014, is the last day to file a timely election for a Debit Reserve Account Balance Adjustment.
     
Employers who received a 2014 UC Contribution Rate Notice with a mailing date other than Dec. 31, 2013, will need to adjust these deadlines according to the instructions on the reverse side of the form.
 
Taxable Wage Base and State Adjustment Factor
 
As part of the Act 60 amendments to the Pennsylvania UC Law, the taxable wage base for employer contributions will be increasing each year from 2013 through 2018. At the same time, the maximum state adjustment factor has been decreased from 1.5 percent to 1.0 percent through 2016 and will decrease further thereafter. The following chart lists the taxable wage base and state adjustment factor amounts beginning 2013:
 
Calendar Year Taxable Wage Base for Employer
Contributions
(per employee per year)
Maximum State Adjustment Factor
2013 $8,500 1.0%
2014 $8,750 1.0%
2015 $9,000 1.0%
2016 $9,500 1.0%
2017 $9,750 0.85%
2018 and thereafter $10,000 0.75%
 
The following solvency measures will be in effect for 2014:
 
Employer Taxes
 
A 5.1 percent (.051) surcharge on employer contributions, unchanged from 2013. The surcharge adjustment is computed by multiplying your basic rate by the 5.1 percent surcharge. The surcharge adjustment does not apply to reimbursable employers.
 
A 0.65 percent (.0065) additional employer contribution, unchanged from 2013. The additional contribution is added to your tax rate as adjusted by the surcharge. The additional contribution is not applicable to non-delinquent newly liable and reimbursable employers.
 
A 1.1 percent (.011) interest factor, unchanged from 2013. Due to the passage of Act 60 of 2012, the interest factor is being used to fund the payment of bond obligations beginning in 2013. It may also be used to fund payment of interest on federal loans, although Pennsylvania does not currently have a federal loan balance. The interest factor is not applicable to non-delinquent newly liable employers. Also, it is not credited to the employer's reserve account nor considered for federal certifications.
 
Employer Taxes Example:
 
Basic Rate   Surcharge   Additional
Contributions
  Interest
Factor
  2014 Total
Contribution Rate
.0210 + (.0210 x .051 = .001071) + .0065 + .011 = .039571
 
Employee Contributions
 
A 0.07 percent (.0007) tax on employee wages, or 70 cents on each $1,000 paid, unchanged from 2013. Employee withholding contributions are submitted with each UC-2/2A quarterly report. Employee withholding applies to the total wages paid in 2014. It is not limited to the $8,750 taxable wage base for employer contributions. Failure to withhold or remit this employee tax could result in interest charges and may affect your contribution rate for subsequent years.
 
Benefit Reduction
 
A 1.7 percent (.017) benefit reduction, unchanged from 2013. With few exceptions, the weekly UC benefit amount for all claimants will be reduced by 1.7 percent.
 
Information on penalties and interest for unpaid UC taxes will be available online in the near future at www.dli.state.pa.us. To access this information, select "Employers," then "Unemployment Compensation," then "UC Tax Information," and then select "Penalties & Interest."
 
If you have any questions concerning this information, please contact the Employer Contact Center at 866-403-6163 or within the Harrisburg area, 717-787-7679 Monday through Friday from 8 a.m. until 4:30 p.m.

EMPLOYERS - Do You Have New Hires?

Report your new hires electronically to the Pennsylvania New Hires Reporting Program, saving time and postage. Simply go to our website at www.pacareerlink.state.pa.us and click on the "Report New Hires" link under the "Employers" section. It's fast, free and paperless.
 
For questions about reporting new hire data, please contact New Hire Customer Service at 888-PAHIRES (888-724-4737) or by email at RA-LI-CWDS-NewHire@pa.gov.

Questions & Answers

Question: Are the services of an elected official excluded under the UC Law?
Answer: Yes. The UC Law excludes services performed by elected officials from "employment."
 
Question: Are the services of an appointed official excluded?
Answer: No. The UC Law does not contain an exclusion for appointed officials.
 
However, services performed by the following individuals are not covered under the UC Law:
  • Individuals serving in positions which are designated as a major non-tenured policy-making or advisory position; and
  • Individuals serving in positions which are designated as a policy-making position the performance of the duties of which ordinarily does not require more than eight hours per week.
UC Issues Update is published by the Pennsylvania Department of Labor & Industry on a quarterly basis. Questions, comments and feedback can be sent via email to uc-news@pa.gov. General UC Tax information is available by calling 717-787-7679 or outside of the Harrisburg area, toll free 866-403-6163 from 8 a.m. to 4:30 p.m. If you have questions regarding UC benefit charges to your account, please call 717-787-4677 from 8 a.m. to 4:30 p.m. If you suspect fraud, report it online at www.uc.pa.gov by clicking "Report Fraud," or contact 800-692-7469.
 
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