Glossary
Confused about a specific term or acronym? Solve the mysteries of terminology with this informative resource. Updated regularly with industry-specific vocabulary and concepts, the Glossary provides easy-to-understand definitions of tax-related terms.
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- 940 - Employer's Annual Federal Unemployment (FUTA)
Filed annually, the Form 940 reconciles the employer's payment of FUTA taxes during the year, showing the calculation of the full unemployment tax liability and the credit for unemployment taxes paid to the individual states.
- Account Balance
The sum of all contributions made to an employer SUI account minus benefit charges. Monies in the account are not refundable to the employer.
- Acquisition
See Merger / Acquisition / Divestiture Analysis.
- Addressee of Record
The address to which the state agency will send unemployment related correspondence. Regulations vary by state as to who can be address of record for different types of documents. Generally, ADP-UCS will act as address of record for clients utilizing the UCM and Total Tax Plus services.
- Additional Claim
An additional claim is a notice of new unemployment filed after a series of claims within a benefit year. There must be a break in filing of one or more weeks with intervening employment and there must be a documented separation.
- ADP®
Automatic Data Processing (NYSE-ADP).
- AE (Account Executive)
An ADP associate responsible for converting new clients to ADP's Payroll System and completing the required legal documents for Tax Filing Service clients.
- Alternate Base Year (ABY)
Claimants unable to establish a valid claim using a regular base period may use an alternate base period of the last four completed quarters.
- Amended Rate
Once the employer has established an unemployment history, states calculate tax rates annually. An amended rate notice may be issued to reflect a change in any of the components used in calculating the original tax rate. Changes in the tax rate may occur due to voluntary contributions, transfers of experience, employer adjustments to amended quarterly tax filings, removal of benefit charges and/or receipt of a favorable determination resulting from a protest of the components as they appeared on the initial tax rate notice. Changes resulting from state legislation, approved after the issuance of the original tax rate, may also affect the tax rate.
- AutoPay®
ADP's primary payroll processing system. AutoPay is used in conjunction with ADP products and services typically targeted to companies with more than 100 employees.
- Average Taxable Payroll
The average of the taxable payrolls of an employer for a specified period immediately preceding the tax rate computation date.
- Base Period
Utilized in the calculation for unemployment benefits, this is the period usually consisting of the first four of the last five completed calendar quarters immediately preceding the beginning of a claimant's benefit year. In some states, the base period consists of the 52 weeks prior to the benefit year. The base period is used to determine a claimant's monetary eligibility and benefit entitlement, as well as the employers' liability.
- Base Period (Employer)
The period for measuring a qualified employer's past experience with unemployment; the four fiscal years preceding the computation date (July 1 of each year). For claimants, the base period is the base year.
- Benefit Charge Audit
ADP-UCS audits the accuracy of statements received for each of the State Unemployment Insurance (SUI) accounts we represent. The audit process includes verifying the validity of all charges. This includes verification that the maximum liability has not been exceeded, the weekly benefit amount has been properly calculated that the individual is eligible for benefits and sufficient earnings were reported. Charges assessed in error are protested to the appropriate state agency. Protests and responses are closely monitored and the outcome is reported to the employer.
- Benefit Charging
Unemployment Compensation Benefit amounts paid to an individual. The benefit amount is based on the amount of wages the employer paid the employee during the base period. The base period is a four-quarter period, most commonly the first four of the last five completed calendar quarters, used by the state to determine benefit eligibility. The states also use the base period to pinpoint an individual's chargeable employers. How much each employer will be charged is based on one of several charging methods. (Also see: Benefit Wage, Employer with Majority of Wages, Inverse Chronological Order, Most Recent Employer, & Prorating)
- Benefit Eligibility Conditions
Statutory requirements which must be satisfied by an individual with respect to each week of unemployment for which compensation or allowance payments are claimed before payment for the week is made. The most basic requirement in order to receive benefits is that the claimant must be out of work through no fault of their own.
- Benefit Formula
A mathematical formula specified in State unemployment compensation law or Federal laws used as the basis for determining an individual's weekly benefit amount and potential maximum benefit entitlement.
- Benefit Ratio Formula
3 or more years Benefit Charges (divided by) Taxable Payroll for the same period = BENEFIT RATIO
- Benefit Wage
Delaware and Oklahoma use this benefit charging method. Each base period employer is charged an amount equal to the amount of wages it paid the individual during the base period, up to a set liability amount. Charging is triggered when the individual has collected a specified number of weeks of benefits.
To help offset the increased liability, the states using the benefit wage charging method provide rehire credits to any employer that rehires a former employee during his benefit year (the year following the initial filing of an unemployment claim). To receive a rehire credit against benefit wages charged to its account an employer must send a request letter to the state.
Delaware employers must submit their request within 90 days from the end of the individual's benefit year.
Oklahoma employers must request the credit within 30 days following the end of the individual's benefit year or the receipt of a charge statement whichever is later. The credit is then applied to future rate computations. (Also see: Benefit Wage Ratio)
- Benefit Wage Formula
3 years Benefit Wages (divided by) 3 years Taxable Payroll = BENEFIT WAGE RATIO (Also see: Benefit Wage Ratio)
- Benefit Wage Ratio (BWR)
A calculated formula used by the state to compute the Unemployment Insurance Experience Tax Rate. The Benefit Wage Ratio is computed by dividing the benefit wages for the previous three to five year period by the benefits charged for the same period. This ratio is then compared to the state rating table to determine the employer tax rate. This formula is currently used in Delaware and Oklahoma.
- Benefits
The monetary amount paid to an unemployed or partially unemployed worker.
- Biweekly
Once every two weeks; type of payroll period that can be used in the percentage of wage-bracket method of withholding.
- Branch Reporting and Location Coding
Under most circumstances each employer with its own unique federal identification number (FEIN) receives one state account number, under which the wages for all of its locations or branches are reported. However, in some states, multi-location employers may have the option to use a branch reporting or location coding method of reporting. Some states allow multiple location employers to request that each location or branch be assigned its own separate state account number referred to as branch reporting. This allows the location to file its own contribution and/or wage reports and makes it easy for the state to allocate benefit charging to the location. Notices of claims filed and benefit charge statements could then be mailed to the applicable location or to ADP-UCS, depending on the state law.
- Calendar Quarter
The three-month period beginning on the first day of January, April, July and October each year and ending on the last day of March, June, September and December, respectively.
- Calendar Week
The seven consecutive day period beginning on Sunday and ending the following Saturday.
- Calendar Year
January 1 through December 31. (Also see: Fiscal Year)
- Charge Statement
Statement of Unemployment Benefit Charge payments made to former employees. Issuance of benefit charge statements is weekly, monthly, quarterly or annually depending on the state regulations.
- Choice of Financing (Reimbursing Analysis)
This analysis compares taxes paid, benefits charged and taxable wages during a one to three year period to determine the most beneficial unemployment funding option (experience rated or reimbursing). The reimbursing option is only available to not-for-profit entities.
- Claim
Formal statement made by a former employee for the purpose of obtaining unemployment benefits.
- Claimant
Commonly used term by the State Unemployment Agency for the person who has filed a claim for unemployment compensation benefits.
- Claimant
A totally or partially unemployed individual who has filed a claim for unemployment benefits.
- Claimant Fraud
The willful misrepresentation or nondisclosure of a material fact by a claimant for the purpose of obtaining benefits to which the individual is not entitled.
- Combined Wage Claim
A claim filed in one State against wage credits earned in two or more States.
- Common Ownership
When blood or marriage relates the owners, partners, officers, shareholders or previous owners of two or more organizations.
- Common Rate Analysis
See Joint Account Analysis
- Common Rate
See Joint Account
- Compliance
Referring to compliance with any federal, state or local laws regarding taxes and dealings with employees
- Computation Date
The date as of which employer's experience is measured for the purpose of determining contribution rates.
- Continued Claim
A claim filed by mail or in person for waiting period credit or payment for one or more weeks of unemployment.
- Contribution - Employee
In most states the employer contribution finances 100% of the Unemployment Insurance Fund. In a limited number of states, the employee is also liable for contributions through payroll withholding. Failure to withhold employee contributions as directed will result in employer liability for all monies not withheld. Employers withholding for employee contributions in non-contribution states may be subject to fines and criminal prosecution.
- Contribution - Employer
Payments to the state unemployment fund as taxes, including voluntary contributions and special assessments paid by subject employers. The contribution amount is determined by multiplying the employer taxable payroll by the assigned unemployment tax rate.
- Contribution Report
An employer's quarterly report of total and taxable wages, the amount of contribution due a State unemployment fund.
- Contribution Rate
See Tax Rate
- Contribution Rate Notice
See Tax Rate Notice
- Covered Employer
An employer that is subject to the provisions of the Employment Security Law. An employer achieves liability based on one or more of the following conditions: employing a minimum specified number of workers and/or duration of employment; the nature of the employment; the amount of wages paid for services in employment; the acquisition of a business; or voluntary election of coverage for non-mandated employers.
- Covered Employment
Generally, any person performing services for a company is an employee if the company can control what, when and how the job functions are to be done. Federal law defines these individuals as "common law" employees. If an employer-employee relationship exists, it does not matter what terminology the employer uses to describe the employees. Employees can include managers, supervisors and corporate officers. (Directors of a corporation, as well as officers of a corporation that perform no services or that are paid no wages, are usually not considered employees.) An employer must report and pay contributions on the wages of all of its employees. Employers should consult the laws of the states in which business is conducted to determine if employees' wages should be reported. States will at times have differing regulations than the FUTA guidelines.
- Covered Wages
Under FUTA, wages include all cash payments made to employees for services rendered, including salaries, commissions, vacation allowances, fees, bonuses, back pay and many fringe benefits. It does not matter in what form the payment is made, when it is made, or on what measurement of production it is based. Wages also include the cash value of remuneration paid other than cash, such as the reasonable value of food or lodging allowed to an employee as part of the employment relationship. Certain payments and benefits are considered exempt under FUTA, as an example, cafeteria plan contributions are only exempt in about half the states. Necessary business expenses incurred in connection with employment and reimbursed or advanced to employees (such as per diem allowances and traveling or moving expenses) are usually not considered taxable wages. For business expenses to be exempt from wages the employer must identify those payments on separate detailed records. If properly documented most states will consider such payments exempt, even if not specifically exempted by law or regulations.
- DBA
See Doing Business As.
- Decision
Written opinion of a Hearing Officer or panel of Judges, based upon testimony and documentation taken at a hearing, that determines if a former employee (claimant) is eligible to receive unemployment compensation benefits or if an employer is liable to pay benefits.
- Deductions
An amount that is or may be subtracted from an employee's paycheck. They can be taken pre-tax or after tax depending on the type of deduction. The employee must agree to have deductions withheld from their paycheck
- Delinquent Account
An employer's account is considered delinquent if any of the quarterly contribution and wage reports and/or unemployment taxes have not been submitted to the state agency by the prescribed due date.
- Dependent
A person who is claimed as a dependent must:
- be a child of the employee who is either under 19 or a full-time student under 24, or
- be a child of the employee who is a full-time student over 24 who is reasonably expected to receive less than $3,000 of income during the taxable year, or
- be reasonably expected to receive less than $3,000 of income during the taxable year, or
- be permanently and totally disabled and receive income for services performed at a sheltered workshop operated by a charity or government
- receive more than half his support from the employee;
- be a citizen, national, or resident of the United States, or a resident of Canada or Mexico, or an alien child adopted by and living with a United States citizen abroad;
- and be either:
(1) a child, grandchild, stepchild, parent, grandparent, stepparent, brother, sister, stepbrother, stepsister, in law, aunt, uncle, nephew, or niece of the employee, or
(2) a member of the employee's household for the taxable year and have the employee's home as his principal place of abode; and not file a joint return.
- Dependents' Allowance
Special allowances provided under some State unemployment compensation laws to beneficiaries with family support responsibilities as defined under the statutory provisions of the laws.
- Determination
An official decision by the Employment Security Department regarding the unemployment claim of an individual or the tax status of an employer.
- District Manager (DM)
Refers to an ADP sales associate.
- Disqualification
State law specifies claimants are disqualified from benefits for a definite or indefinite period. These include voluntarily leaving employment without good cause; discharge for misconduct, felony, or gross misdemeanor; misrepresentation; refusal to work; participating in a labor dispute which results in work stoppage; and full-time attendance at school.
- Divestiture
When an employer sells all or part of its business to an unrelated entity.
- Division
A part of a company not filing under it's own federal and state account numbers. It is possible to have several divisions in one state under the same account number. (Also see: Subsidiary)
- Doing Business As (DBA)
The name under which an individual or business operates.
- Duration of Benefits
The number of weeks of benefits a claimant may receive. May be expressed in total dollars available
- EE
Employee.
- Earnings Allowance
The amount prescribed by State unemployment compensation laws that a claimant may earn without any reduction in the weekly benefit amount for a week of total unemployment
- ELECTRONIC BUSINESS TAX SERVICE
Electronic Business Tax Service (EBTS) An added-value ADP service that enables clients to use a touch-tone telephone system to deposit business income and excise tax payments electronically as required by the Electronic Federal Tax Payment System (EFTPS).
- Electronic Funds Transfer (EFT)
Some states and federal agencies require employers to pay unemployment taxes by electronic funds transfer. There are several regulations for electronic funds transfer.
- Eligibility Determination
A determination as to whether a claimant meets all of the eligibility conditions prescribed by law.
- Employee
An individual performing services for an employing unit, as defined by state law, under a master/servant or employer/employee relationship.
- Employee Contributions
The unemployment compensation taxes required by a very few State unemployment compensation laws to be deducted by the employer from an employee's pay and paid with the employer's contribution to the State agency.
- Employer
An employing unit, as defined, subject under State or Federal unemployment compensation laws.
- Employer Contributions
See Contributions - Employer
- Employer with Majority of Wages
An unemployment insurance charging method, in which the employer that paid the largest amount of wages during the base period is charged for all benefits paid.
- Experience
A record of an employer's state unemployment insurance (SUI) account detailing charges, taxable wages and/or quarterly and other contributions. Experience is used to calculate the employer SUI tax rate.
- Experience Rate
The state unemployment insurance tax rate that is based on the amount of unemployment benefits paid out as a percent of total wages. The experience rate has been calculated to ensure that an employer has sufficient funds to cover future unemployment disbursements.
- Experience Rating
The calculation of an employer SUI tax rate, based on its ability to maintain a stable work force through a positive payroll history and minimizing benefit charges against its account. SIC codes are often utilized as a factor in the determination of an employer experience rate. (Also see: SUI,SIC)
- Experience Rating Record
The account maintained by the Agency on each employer and containing all the elements for the computation of the employer's tax rate.
- Experience Tax Rate
A method for determining the contribution rates of individual employers according to the factors specified in the State unemployment compensation code for measuring an employer's experience with respect to unemployment. After an employer has met the state's merit rating requirements an experience rate is assigned. Depending on the State, an employers eligibility for experience rating is based on the number of years it has been chargeable for unemployment benefits and/or liable for unemployment taxes. Most states will wait to assign the experience rate until the beginning of the next rate year; however, a few will assign a new rate as soon as the employer is eligible. (Also see: Benefit Ratio Formula, Benefit Wage Formula, Reserve Ratio Formula)
- Extended Benefits (EB)
The supplemental program that pays extended compensation during periods of specified high unemployment to individuals for weeks of unemployment after (1) they draw the maximum potential entitlement to regular compensation within their benefit year or (2) after their benefit year ends while they are in continued unemployment status and have insufficient wage credits to establish a new claim provided, however, that the extended benefit period in the State began prior to the end of their benefit year. Extended benefits paid to claimants under State unemployment compensation law are jointly financed on a 50-50 basis by State and Federal funds; extended benefits paid to UCFE are totally financed by Federal funds.
- Extended Unemployment Compensation Account (EUCA)
An account in the Unemployment Trust Fund from which the Federal portion of shareable extended benefits and Emergency Compensation authorized by the Congress are paid to State agencies.
- Federal Employer Identification Number (FEIN)
The identification number assigned to employers by the Internal Revenue Service to control reporting and accounting functions. Some states will use the FEIN as the core for employer account numbers, but they are not interchangeable.
- FED ID
See FEIN
- Federal Supplemental Benefits (FSB)
A temporary Federal program totally financed by Federal funds that pays supplemental compensation during specified periods of high unemployment to individuals who have exhausted their regular compensation, State-financed additional benefits, and/or the jointly financed Federal/State extended benefits.
- Federal Unemployment Tax Act (FUTA)
Federal law first enacted in 1939, which sets guidelines for the administration of unemployment compensation programs. All liable employers pay a federal tax to fund administration of State and Federal unemployment insurance programs. These monies are also used to fund extended benefits. States must adhere to the minimum FUTA guidelines in terms of taxation and benefit administration but may set higher standards.
- Federal Unemployment Account (FUA)
An account in the Unemployment Trust Fund from which repayable advances are available to States whose unemployment fund reserves are temporarily unable to meet current benefit payments.
- Federal Unemployment Account (FUA)
An account in the Unemployment Trust Fund from which repayable advances are available to States whose unemployment fund reserves are temporarily unable to meet current benefit payments.
- Filing Status
Marital status of an employee for withholding purposes.
- Fiscal Year
Typically July 1 through June 30 generally, the federal government and some states use October 1 through September 30. (Also see: Calendar Year)
- Frozen Wage Credits
Under certain circumstances, state law allows for the creation of special benefit year for individuals who were injured, allowing use of a base year prior to the injury. This effectively ìfreezesî those wage credits. Such benefits are not charged to base year employers.
- Fraudulent Claim
A claim where the claimant has fraudulently claimed benefits by furnishing false information, or has withheld pertinent information deliberately, for the purpose of receiving benefits.
- Fund Balance Ratio
The computation each June 30 of the balance in the UI Trust Fund divided by total wages in the preceding calendar year. This calculation determines the tax schedule for the following year; the higher the fund balance ratio, the lower the average tax.
- FUTA Tax Return (Form 940)
Annual federal unemployment tax return filed during January of each year. The report calculates the total federal unemployment tax for the completed calendar year. The return details each SUI account number, corresponding taxable wages, tax rate and contributions made. To download 940 forms and filing information :click here
- Gross Wages
Total remuneration paid an employee before taxes and deductions.
- Hearing
An administrative procedure, by the appeals section of a state unemployment agency, to accept testimony and documents relating to the separation of a former employee (claimant) from their work.
- High-Quarter Formula
A benefit formula which uses an individual's highest quarter of wages in the base period to compute the weekly benefit amount.
- Higher Authority Appeal
The higher of two administrative authorities provided by State unemployment compensation laws to make decisions with respect to appeals.
- Independent Contractor
An individual, who is self-employed, and is free from the direction and control of an employer covered under state and federal unemployment laws. The Internal Revenue Service uses certain guidelines to determine the independent contractor relationship. Many states utilize the same guidelines. Upon termination of the independent contractor's services, the individual may attempt to collect unemployment benefits. The company should be prepared to prove to the state that the contracted individual was not an employee within the meaning of the law.
- Initial Audit
This audit assures clients new to ADP-UCS that the most recently assigned SUI tax rate has been calculated correctly. Historical documentation such as charge statements, quarterly tax reports, and 940 forms are required to complete this audit.
- Interstate Combined-Wage Claim
A combined-wage claim in which the paying State is not the State in which the claim is filed and the interstate claims procedures are used in making the payment.
- Inverse Chronological Order
This benefit charging method combines the prorating and most recent employer methods. Each base period employer's liability is calculated using the prorating method, rather than charging all employers simultaneously. States using the inverse chronological method charge the most recent employer until its liability has been exhausted. The next most recent employer is then charged, and so on.
- Involuntary Deductions
Deductions over which the employers and employees have no control.
- Joint Account (Common Rate Group)
Two or more separate entities in the same industry can share a common unemployment insurance tax rate. When employers form a joint account the primary goal is to achieve a lower overall tax rate for the members. A limited number of states allow joint accounts for tax rated employers while the majority of states allow joint accounts for reimbursing employers. In some instances the tax rate of one member may increase but the combined experience of all members will most often result in a group tax savings. Before a joint account can be established an application must be approved by the state agency. Each state has specific regulations for joint accounts that can include the minimum duration for a joint account and under which circumstances a member may sever the joint account agreement. A complete benefit analysis should be performed prior to entering a joint account agreement.
- Joint Account Analysis (Common Rating Evaluation)
Certain states allow employers to combine the components of two or more unemployment insurance experience rated accounts to arrive at a joint account tax rate. This analysis summarizes the recommended grouping(s) and details estimated savings opportunities. In addition, if a grouping exists for the prior year, the effect of continuing this grouping and any restrictions that may be imposed by the state agency will be identified. Instruction for the implementation of recommended grouping(s) is provided.
- Jurisdiction
The legal authority which a court has over particular persons and certain types of cases in a defined geographical area.
- Lag Quarter(s)
The quarter(s) between the end of a base period and the quarter which includes the beginning date of the benefit year.
- Leased Employment
See Employee Leasing
- Legal Mother
A woman who is recognized by law as the female parent.
- Liability Date
The date an employer must begin reporting wages and paying taxes for unemployment insurance purposes. An employer should be clear as to the regulation of the states business is conducted in.
- Liable State
Any State against which a worker files a claim for compensation through the facilities of another (agent) State.
- Location/Department Experience Rating
This analysis calculates an experience tax rate based upon the payroll(s) reported and specific benefit charges for each location/department. This analysis is used by management in allocating expenses associated with unemployment costs to the appropriate location or department.
- Lower Authority Appeal
The lower of two administrative authorities provided by the State unemployment compensation laws to make decisions with respect to appeals. A State agency with only one appeals authority should consider that as a lower appeals authority.
- Mass Separation Notice
A report in some States of a mass separation sent by an employer to the State agency listing the names of workers separated and other required data thus eliminating the need for individual separation notices.
- Mass Partial Unemployment
Partial unemployment of a large number of workers in a given employing unit occurring at approximately the same time and arising from a reason common to all such workers.
- Maximum Benefits Payable (MBP)
The maximum amount of benefits an individual may receive during a benefit year (or duration of benefits). Also referred to as Maximum Benefit Amount (MBA).
- Maximum Benefit Amount (MBA)
See Maximum Benefits Payable (MBP)
- Maximum Potential Benefit Amount
The largest amount of benefits for weeks of total unemployment that an individual may receive under a State or Federal unemployment insurance law.
- Maximum Potential Duration
The highest number of weeks of total unemployment for which benefits are payable to any claimant in a benefit year or other period of eligibility under a State or Federal unemployment compensation law.
- Maximum Weekly Benefit Amount (MWBA)
The highest weekly benefit amount for a week of total unemployment as provided under a State or Federal unemployment compensation law.
- Medicare
Used to provide medical benefits for certain individuals when they reach age 65. Workers, retired workers, and the spouses of workers and retired workers are eligible to receive Medicare benefits upon reaching age 65.
It is funded through the hospital insurance component of FICA. Employer and employee pay matching amounts; no annual wage limit.
- Merger
Two or more related entities combine their accounts by filing articles of merger with the Secretary of State. The state unemployment agency must be notified of all mergers, acquisitions and divestitures.
- Merger / Acquisition / Divestiture Analysis
When a business transfer takes place through merger acquisition or divestiture some states allow the new company the option of transferring the experience rate of the Predecessor Company. Certain states require the transfer of experience. The transfer can be made in whole or in part dependent on state regulations and the scope of the business change.
This analysis compares the projected experience rate of the Successor Company with and without the combined experience of the merged company. If the transfer of experience is elected, the successor company is then liable for all unemployment benefit liability attached to the predecessor account. This analysis is to allow employers to elect the method that can create a savings opportunity.
Each state has unique regulations regarding experience transfer. Each state requires that the appropriate agency be notified of any business change. Many states will not allow a transfer if the sole reason for the change in status is a reduced unemployment tax rate. The employers involved must show that the transfer took place for valid business reasons. In addition, some states require a transfer if there is common ownership between the predecessor and successor employers. Common ownership may exist if the owners of each entity are related by blood or marriage. Also,if the same individuals have the controlling interest of stock or have controlling voting shares in both entities, common ownership may exist.
Many states have specific criteria for determining common ownership. In states in which a transfer of experience is optional, the employer has the opportunity to potentially save hundreds or thousands in unemployment tax dollars. To realize such savings, it should determine whether a transfer is more beneficial than retaining its current rate or if the successor is a new employer, whether the rate after a transfer is lower than the new employer rate.
- Merit Rating
Upon being qualified to do business in a state an employer will receive a state unemployment insurance (SUI) account number. States regulate a period of liability or chargeability in which an employer must serve to be a "qualified" employer. Once served, the employer will receive a rate based on its experience called the "merit" rate. (Also see: New Employer/Non-Merit Rate)
- Monetary Determination
A written notice issued to inform an individual whether or not the individual meets the employment and wage requirements necessary to establish entitlement to compensation under a specific program and, if entitled, the weekly and maximum benefit amounts the individual may receive.
- Most Recent Bona Fide Work
Work accepted in good faith with the earnest intent on the part of both the employee and the employer that it be of a continuing nature, from which a worker is last separated prior to filing a claim.
- Most Recent Employer
This unemployment insurance benefit charging method, used by several states, charge the individual's most recent employer for all benefits paid. An employer is defined as the most recent employer in differing ways, including if it employed the individual for a specified minimum number of days or weeks, or paid the claimant a specified minimum amount of wages.
- Negative Reserve Balance
When the unemployment insurance benefit charges against an employer reserve account have exceeded the contributions paid. Some states will "write off" the negative balance amount to assist employers in maintaining account solvency. The "write off" can have negative effects to the employer tax rate, such as mandatory rate increases up to the maximum rate. The increase may be for one or more years, depending on the state regulations.
- Nonprofit or Government Entities
Nonprofit organizations state and local government entities and political subdivisions are exempt from FUTA under Internal Revenue Code Section 501(c)(3) but are still covered by state unemployment laws. Organizations deemed exempt from FUTA under the Internal Revenue Code are generally allowed the options of either reimbursing the state unemployment fund dollar for dollar with the amount of benefits paid to former employees, or paying unemployment taxes in the same system as for-profit employers. Some state agencies require non-profit and government entities to utilize only the reimbursing method.
- Non-charged Benefits
Unemployment insurance benefits, which are paid to claimants, but are not charged against a base year employer.
- Non-monetary Determination
A decision made by the initial authority based on facts related to an issue under the following conditions: (1) the present, past, or future benefit rights of a claimant or claimants are involved; (2) there are identifiable documents showing the type and disposition of an issue, the material facts considered in arriving at the determination, and the legal result; and (3) the determination, if it involves the denial of benefits, is issued in the form of a written determination notice to the claimant. (No determination denying benefits may be considered to be a non-monetary determination until the claimant has been afforded an opportunity to furnish any facts he/she may have relating to disqualifying information received from other sources.)
- Non-monetary Issue
An act, circumstance, or condition potentially disqualifying under State law.
- Non-monetary Redetermination
A decision made under statute, regulation, or well-defined policy specifically requiring the reopening of a non-monetary determination before the administrative appeal stage, and which affirms, reverses, or modifies such determination.
- Offset Credit
A credit towards the Federal Unemployment Tax Act (FUTA) tax allowed to employers who pay a state unemployment tax.
- Overpayment
An amount of benefits paid to an individual to which the individual is not legally entitled, regardless of whether or not the amount is subsequently recovered.
- Partial Claim
A claim filed by a worker, normally assisted by the employer, for any week wherein the worker did not work a full week nor earn an amount equal or in excess of his weekly benefit amount.
- Partial Unemployment
An individual still attached to his employer, but through circumstances beyond his control, did not work a full week and earned less than his weekly benefit amount. A claim for partial unemployment is usually filed by the employer.
- Part-Total Unemployment
A week during which an individual works less than full time due to lack of work and earns less than his weekly benefit amount and there is no attachment to a regular employer.
- Payroll Variation (Alaska)
The state compares gross payroll from one quarter to the next-to determine a quarterly decline in payroll. (Increases in gross payroll are assigned a zero.) The quarterly decline is divided by the prior quarter gross payroll to determine the quarterly decline ratio. The quarterly decline ratios are added together and averaged. The average is compared to a state table to derive the employer tax rate.
- Pend/Hold
To pend is to delay payment of benefits because there is a question about the claimant's eligibility.
- Period of Employment
The period beginning with the first day an employee works for an employer and extending through the last day he works prior to a termination.
- POA
See Power of Attorney.
- Pooled Account
A fund in which all contributions are mingled and undivided and from which benefits are payable to all eligible claimants.
- Pooled Account
Some states allow certain not-for-profit employers a program to combine the unemployment insurance benefit charges of two or more reimbursable accounts. The benefit charges are pooled and typically one member of the pool is responsible for management of the program. Each member of the pool retains their own SUI account and remains responsible for payment of contributions.
- Pooled Account Analysis
This analysis outlines the pooled tax rate for the current and previous year(s). Detail of tax savings/loss is calculated and a determination is made as to the benefit of maintaining the pooled account.
- Positive Reserve Balance
When the contributions paid into an employer's SUI account have exceeded the benefit charges paid out during the specified period.
- Potential Duration
The total number of weeks of total unemployment for which an individual claimant may receive benefits in a benefit year or period of eligibility under the entitlement provisions of a State or Federal unemployment compensation program or any other program administered by a State agency.
- Predecessor
The entity that existed prior to a partial or total transfer of a business.
- Professional Employer Organization (PEO)
See Employee Leasing
- Power of Attorney (POA)
A legal document authorizing ADP to act as agent for our clients when dealing with state and federal agencies. Without a valid Power of Attorney form on file, the agencies are not authorized to release information to any party other than the employer.
- Property Right
The claimant has property right to benefits once a valid monetary determination is issued, found the claimant to be nonmonetarily eligible for benefits and allowed waiting period credit or benefits. Once the claimant has established property rights, benefits cannot be stopped or pended without giving the claimant due process.
- Prorating
Prorating is the most common unemployment insurance charging method. Each of an individual's base period employers is simultaneously charged a proportional percentage of total benefits paid. The percentage is based on the individual's total base period wages paid by each affected employer.
- Quarterly Contribution and Wage Reporting
Tax report filed during April, July, October and January for the previous calendar quarter. Reported information for the quarter will include gross payroll, taxable payroll, non-taxable payroll, SUI tax rate and SUI taxes due. Certain states reporting will include or require information regarding supplemental taxes, surcharges, credits, penalties and monthly employee counts. The information reported is used by the state agency in determining future SUI tax rates and may also be utilized by the federal government for statistical purposes in labor reporting.
- Qualified Employer
An employer who is eligible for a calculated tax rate by virtue of fulfilling two requirements: employment during certain specified periods, and timely payment of taxes.
- Regular Compensation
Benefit payments to individuals with respect to their unemployment under any State unemployment compensation law, including payments pursuant to 5 U.S.C. chapter 85, but not including additional, extended, Disaster Unemployment Assistance, or Trade Readjustment Allowances.
- Reimbursing Analysis
See Choice of Financing
- Reimbursable Employer
Certain nonprofit organizations, State or local government and political subdivisions which elect or are required to pay into the State unemployment fund a sum in lieu of contributions as provided in the State unemployment compensation law.
- Remuneration
Any payments of wages, as defined by the state. Can include payment of regular wages, vacation pay, severance pay, bonuses and options. The definition of wages varies by state.
- Reopened Claim
The first claim filed after a break in claim series during a benefit year caused by other than intervening employment such as illness, disqualification, unavailability, or failure to report for any reason other than job attachment.
- Reorganization
Reorganization of a commonly owned entity may involve a company changing its federal identification number in whole; or rearranging the corporate structure by moving divisions or subsidiaries under a different federal identification number.
- Requalification
A process by which a claimant may reestablish eligibility for unemployment insurance through reemployment following a determination of ineligibility and a period of disqualification.
- Reserve Account
A separate account maintained in a State unemployment fund with respect to a subject employer to which are credited contributions paid by such employer and to which are charged all and only those benefits which are based on services performed for such employer.
- Reserve Balance
The sum of all contributions made to an employer SUI account-minus benefit charges. Monies in the account are not refundable to the employer.
- Reserve Ratio
The ending SUI reserve balance (as shown on the tax rate notice) divided by the average taxable payroll for the previous 3 to 5 year period, dependent on the state.
- Reserve Ratio Formula
Prior SUI Reserve Balance (plus) Contributions (minus) Charges = NEW RESERVE BALANCE
- Sarbanes-Oxley Act
The Sarbanes-Oxley Act was signed into law in an effort to prevent or reduce the incidence of corporate and securities fraud. Significantly, the Act (technically named "The Corporate and Criminal Fraud Accountability Act of 2002") provides protection to, and even encourages, employees who would report such fraud.
Sarbanes-Oxley provides the most forceful protections to date for corporate whistleblowers. It prohibits retaliation against whistleblowers, reinforces the act of whistleblowing, and requires public companies to adopt a code of business ethics and protocols for receiving and reviewing reports of ethical wrongdoing. More importantly, the Act enforces compliance by making both corporations and individuals accountable for their actions via administrative, civil, and criminal enforcement mechanisms.
- Separation Record
Documentation prepared by an employer to outline reasons why an employee is no longer employed. The documentation can include disciplinary action, policy or procedure guidelines and any written statement by involved individuals. For additional information about effective documentation contact your UCS Client Service Representative. To download a separation form click here
- Social Security Administration (SSA)
The federal government agency that administers social security.
- Social Security Number (SSN)
An individual's taxpayer identification number; it consists of nine digits in the format 000-00-0000.
- Special Tax Rate
A rate assigned to the employer account that did not result directly from a computation method under regular experience-rating provisions of the State unemployment compensation law.
- Standard Contribution Rate
The basic rate of contributions from which variations are computed under the experience-rating provisions of a State unemployment compensation law.
- Standard Industrial Classification Code (SIC)
Each employer, upon application for a federal employer identification number (FEIN) is assigned a SIC number. The Standard Industrial Classification was developed for use in the classification of businesses by type of activity in which they are engaged as a way to promote uniform collection of data at the federal level. SIC codes are based upon the primary activity or output that a company is engaged in.
- State Unemployment Insurance (SUI)
A quarterly tax paid to a state unemployment agency. An experience rate assigned to the employer and a taxable wage limit established by the agency determine the amount of the tax due. The SUI tax can be paid by the employee (SUIEE) or paid by the employer (SUIER) or both - depending on the state's rules.
- State Unemployment Insurance Identification
The identification number assigned to employers by the state agency to control unemployment related reporting and accounting functions. The number will not be that same as the FEIN issues by the federal government, however, several states do use the FEIN as core to the SUI. To download a SUI application click here
- Stoppage of Work
Under the labor dispute provision, a substantial curtailment of the normal operation of an employer at a given location.
- Subsidiary
A separate business entity filing reports under state and federal account numbers-different than those of the parent company. (Also see: Division)
- Successor
The remaining entity, after a partial or total transfer of business.
- SUI
See State Unemployment Insurance.
- SUI Exempt
Some nonprofit employers are excluded from paying State Unemployment Insurance tax. Exempt employers are not required to file any quarterly returns or Employee Wage Detail Reports.
- SUI Surcharge
An additional temporary fee assessed by a state unemployment agency in order to pay back loans from federal unemployment funds or to replenish low state unemployment funds.
- Surcharges
Contribution assessments made to finance training, health care and administrative costs. Certain states also maintain special funds for the possibility that the states' unemployment trust fund may become insolvent.
- Taxable Payroll
The dollar value of all wages subject to the unemployment insurance tax.
- Tax Audit
This report verifies the accuracy of the most current SUI tax rate(s) assigned by the State agency. Benefit charges and credits are verified to assure the state agency has assigned the correct tax rate for each ADP-UCS client.
- Tax Rate
The unemployment tax rate assigned to an employer by the state agency. The rate multiplied by taxable wages is the amount of quarterly contributions owed by an employer.
- Tax Rate Analysis
This analysis compares the tax rates of two or more years. The tax savings/loss is calculated for the current year or the cumulative of two or more years.
- Tax Rate Notice
Annual report issued by the state agency showing the unemployment tax rate assigned for the year period. Most states utilize a calendar year period while a small number utilize a fiscal year period.
- Tax Rate Projection
This analysis can project the SUI tax rate for the next year. Employers use this analysis most often for budgeting purposes.
- Tax Rate Verification
ADP-UCS verifies the accuracy of the SUI tax rate and its components. Tax rate assessment found to be in error is protested to the appropriate state agency. Protests made to the state agency are closely monitored and the result is communicated to the employer.
- Transfer of Experience - Total or Partial
See Merger/Acquisition/Divestiture Analysis
- Uniform Duration
A provision of State unemployment compensation laws establishing the same number of weeks of potential duration for all eligible claimants.
- Unemployment Compensation for Federal Employees (U
The Federal program that provides benefits to Federal employees established by 5 United States Code, Chapter 85. Supplemental extended compensation is payable to Federal employees under other provisions of State and/or Federal laws during periods of high unemployment.
- Unemployment Compensation for former military (UCX
The Federal program that provides benefits to former military established by 5 United States Code, Chapter 85.
- Unemployment Compensation(UC or UI)
A program under which an individual who is unemployed through no fault of his own is paid weekly benefits based upon his past wages in employment covered by State or Federal UC laws.
- Uniform Base Period
A base period which starts on the same calendar date for a new or transitional claim for all claimants.
- Uniform Benefit Year
A benefit year which starts the same date for all claimants in a State.
- Voluntary Contribution
Additional monies paid into an employer experience rated SUI account, other than quarterly payments. A voluntary contribution can allow the employer to obtain a more favorable tax rate. In most states the contribution will increase the reserve balance of the account while other states credit the contribution to erase previous charges. Nearly half of the states allow employers to make a voluntary contribution payment to their experience rated account. From year to year, additional states may also allow a voluntary contribution.
- Voluntary Contribution Analysis
This analysis determines if a voluntary contribution is profitable for the employer. ADP-UCS prepares a report for our clients detailing the contribution amount required to reduce the SUI tax rate. If the contribution amount exceeds the net savings, our recommendation will be to not make the contribution. If the net saving exceeds the contribution amount, detailed instruction will be supplied on how to make the contribution payment to the state agency. Many states will print on the tax rate notice the amount an employer can pay as a voluntary contribution. Most states will not outline if the payment represents net savings or a net loss to the employer. A substantial change in taxable payroll can affect the contribution analysis, if your business expects a change of this nature, please notify your UCS Client Service Representative.
- Wage Report
A quarterly report by a subject employer listing the name, SSA, wages and hours worked of an individual workers in employment during the quarter.
- Wage Record
Individual name, SSA number, wages and hours worked information.
- Wage Credits
Wages earned by persons working in employment covered by State unemployment compensation laws.
- Wage and Separation Report
A form used by a State agency to request a report from a base period employer regarding the wages earned by the claimant and reason(s) for separation from employment.
- Waiting Period
A week of unemployment for which a claimant does not receive compensation but must meet the same eligibility requirements that are necessary to qualify for receipt of compensation for subsequent weeks of unemployment during the benefit year. (In some States, the waiting period, after specified periods of unemployment, may become compensable.)
- Weekly Benefit Amount (WBA)
The amount payable to a claimant for a compensable week of total unemployment.
- Weeks Claimed
The weeks covered by intrastate continued claims and interstate continued claims taken as agent State for which waiting period credit or payment of compensation is requested.
- Week of Unemployment
Any week during which an individual is totally or partially unemployed.
- Weekly Earnings Allowance
The amount prescribed by law that a claimant may earn during a week without any reduction in the weekly benefit amount for that week.
- Week of Partial Unemployment
A week in which an individual works less than regular full-time hours for his/her regular employer because of lack of work, and earns less than the amount specified in the definition of a week of total unemployment but more than the allowable earnings prescribed by the State unemployment compensation law, so that, if eligible, the individual receives less than his/her full weekly benefit payment.
- Weeks Compensated
The number of weeks of unemployment for which benefits are paid.
- Witness
By broad definition this is a person who offers testimony at a hearing. The most important type of witness is the first-hand witness. This is a person who actually took part in, or viewed the incident(s) that lead to the separation of the former employee. In cases of a voluntary quit, it is the person who accepted the resignation. In cases of a discharge, it is the person who was present at the incident that caused the employer to make a decision to discharge the employee. Other types of witnesses include policy experts (Human Resources) and technical experts (technicians, medical personnel) who may not have taken part of the events directly, but do have relevant information to offer at a hearing.
- Work sharing
A plan that an employer uses to avoid employee layoffs, by reducing the work hours of a group of employees. The employees may collect partial unemployment benefits to supplement their income. Requirements vary from state-to-state and an employer should carefully review those requirements prior to committing to such a program