Unemployment insurance provides a valuable safety net to individuals who have lost their jobs through no fault of their own. But for employers, mandatory participation in this joint state and federal program adds an extra layer of record keeping and compliance. Is your company aware of its record-keeping obligations under Utah’s unemployment insurance law? Here are some tips to help you check.
Utah’s unemployment insurance program
Employers in every state are required to participate in an unemployment insurance program that is jointly administered by the employer’s home state and the federal government. While each state is responsible for creating and managing its individual unemployment insurance program, every state’s program must comply with the Federal Unemployment Tax Act (FUTA).
The laws establishing Utah’s unemployment program are found in the Utah Employment Security Act. Among other things, this act defines the individuals or organizations that are employers and under what circumstances an unemployed individual may (or may not) qualify for benefits.
Most employers will pay both state and federal unemployment taxes to fund unemployment benefits. However, as this guide from the federal Internal Revenue Service explains, employers are allowed to deduct a substantial portion of the unemployment taxes paid at the state level from their federal unemployment tax liability.
Your unemployment insurance record-keeping duties
As you can imagine, keeping track of the documentation necessary to ensure compliance with both state and federal laws can be tricky. For this reason, carefully maintaining your records is essential. In its comprehensive Employer Handbook for Utah’s unemployment insurance program, the state of Utah has indicated several types of records Utah employers should maintain.
This list of information employers should collect and retain includes the name and social security number of each employee and the date of his or her hire. Employers should also maintain records regarding where an employee performed his or her services and the date of any termination. To calculate an employer’s unemployment tax liability, the state will also need to file and maintain quarterly updates on all remuneration paid to its employees. And, of course, employers will need records of the payments made to the Utah Unemployment Insurance Trust Fund to take advantage of those federal deductions.
In addition to tracking necessary employee information, we recommend that employers who frequently hire independent contractors be especially careful to maintain records that clearly define the work relationship between themselves and the independent contractor. Both the state of Utah and the federal government may penalize employers who intentionally or inadvertently fail to pay unemployment taxes due to what is known as worker misclassification.
Achieve efficiency through partnering with a PEO
For those business owners who would rather leave managing payroll tax issues and the accompanying record-keeping duties to someone else, the Utah Employment Security Act permits professional employment organizations to serve as the employer of record for their workers. When a PEO in Utah serves as the employer for your business’s workers, it is the PEO’s unemployment tax rate that applies. And, the PEO ensures your ongoing compliance. Are you interested in finding out more about how Zamp’s unemployment tax rate compares to yours? Pay a visit to our State Unemployment Rates and Claims Management page here at Zamphr.com or give us a call. We’d love to help you make operating your business easier.
