Seasonal Employers and Unemployment Benefits
The US Department of Labor provides a handy table that shows how long seasonal employees must work in order to receive unemployment benefits. Some states have laws that favor the seasonal employer such as New Mexico where in order to be eligible for seasonal unemployment benefits, the wage earner must work consecutively for at least 18 months and unemployment benefits are based on wages earned in the first 4 of the last 5 completed quarters.
In most states, new employers are given a set unemployment tax rate they must pay to the state each quarter. This set rate usually remains the same until the new employer has some employment history (between 4-5 years) and that tax rate may go up or down depending upon the amount of unemployment benefits paid out.
In addition to the state tax rates, every employer (seasonal or otherwise) must pay a FUTA tax which is 6.2% on the first $7,000 the employee earns; FUTA taxes are paid annually by filing a 940 IRS tax form. FUTA taxes help to fund state unemployment benefits.
One of the effects of seasonal unemployment for an employer is if indeed they fall into state categories where unemployment benefits must be paid out, their state tax rate can rise year after year based on claims filed and paid. An initial small state tax rate can rise quicker than you think meaning each quarter, your state wage report (filed with your Department of Labor), takes gross wages and multiplies the given tax rate and that’s what must be paid to your state. The more claims filed and paid out, the higher your rate will rise meaning money out of your bottom line.
If your state requires that a person must work a set number of quarters in order to be eligible for unemployment benefits, you may think if they work only 4 months a year you are safe from unemployment claims. Unfortunately, this is not always the case. Keep the word “consecutive" in mind here.
A seasonal worker may work at a ski resort in the winter and once the “season" is ended may take up additional seasonal work in a warmer climate immediately, meaning their seasonal work is “consecutive." In the end, the seasonal employer who paid wages the longest is usually the one paying for that seasonal worker’s unemployment benefits.
The best way to determine how the laws work in your state is to call your local Department of Labor. Even if a seasonal worker leaves your state and finds immediate work, state-to-state benefits come into play.
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