When an employee working in Wisconsin is laid off or let go, they may be eligible to collect money for unemployment. Employees may be able to get regular payments for a period of time to allow them to seek new employment. While former employees obtain payments through the state of Wisconsin, employers must pay into the fund via taxes. It is helpful for employers to understand how unemployment works in Wisconsin.
The general process for unemployment insurance in Wisconsin works in a similar way to typical insurance. Employers pay into the fund via taxes and employees file for benefits when they qualify. Each employer has their own “account” that tracks how much money they put in and how much is funded to employees that they laid off. An employer must have paid enough money to cover the benefits. If they do not, the employer must pay the balance to the state. Employers must pay unemployment tax on a regular basis.
Employers must pay unemployment taxes under certain conditions. Taxes must be paid for employees who are employed full or part-time and worked at least 20 weeks during the year. They must also pay taxes for any employee who was paid $1,500 in a quarter through wages, salary, tips, or bonuses. When those conditions are met, the employer must pay taxes based on the taxable wage base for the employee. The base rate for non-construction employers remains at $14,000 in 2023. That means that an employer must pay UI taxes on the first $14,000 for the employee.
Only employees performing work covered by unemployment are eligible to receive money. An employee may seek unemployment when they are let go or laid off from their job. However, they must be able to work and cannot collect unemployment if they were fired for cause. To seek unemployment, the former employee must go through the Wisconsin Department of Workforce Development (DWD) and must follow their rules and guidelines. For instance, an employee must actively seek employment elsewhere in order to collect unemployment.
Employers must follow the law and are required to pay proper UI taxes. Failure to pay or making a late payment can result in penalties. As an employer, you should establish internal processes for terminating employees for cause. This will help to reduce the payment of unemployment benefits as long as you can prove that you fired the employee due to their lack of performance.
Some industries have different unemployment tax rules, such as construction and real estate. It is best to implement company standards and convey them to all employees when you hire them. You should keep good records of your employees and the taxes you paid for unemployment. The Wisconsin DWD provides useful information for employers.
Unemployment matters can be complex, so it is helpful to seek guidance from a knowledgeable employment law attorney. If you do something wrong, it could prove to be a costly mistake for your business. To learn more about unemployment taxes and payments, contact our legal team at Moen Sheehan Meyer, Ltd. at (608) 784-8310 or online for a consultation.