Q: What happens when an employee leaves and how does it affect your MA Unemployment taxes?
- When an employee is terminated, the day they leave they must be paid for all wages they are owed plus any PTO or Vacation hours accrued. Sick hours typically do not have to be paid out. When an employee resigns instead, you may pay them with the next regularly scheduled payroll.
- As far as unemployment, you must let the employee know (whether they were terminated or resigned) that they are eligible to apply for unemployment. Being eligible to apply does not mean they will be granted unemployment. You must give them this pamphlet about how to apply.
- After the employee applies, MA DUA will send the employer a Monetary Determination Letter, which tells the “Total Potential Benefit” amount the employee can receive if approved for unemployment. The notice is not a bill or a determination, it is only a notice.
- Sometimes there are questionnaires sent to the employer for more information about the separation. It is very important to reply to the notices before the due date. Otherwise, you are giving up your right to provide information about the separation and contesting the claim.
- Ensure you have your Employer MA Unemployment Login so you can reply quickly and easily online. https://unemployment.mass.gov/Employers/_/ Click Login, enter your email and PW. If you have forgotten your PW, click Forgot PW.
- How is your Unemployment account affected when someone is approved for unemployment?
- Every payroll you are charged a certain assigned percentage for unemployment on the first $15,000 (MA) in gross wages that each employee earns in a year.
- Each payroll you pay into your MA unemployment account as part of your employer taxes.
- If an employee is granted unemployment, then the payments come out of the monies in your MA Unemployment account. You do not immediately pay additional taxes.
- Each year, the MA DUA calculates what your balance should be in your account. If your account is low due to terminated staff collecting, then expect the percentage that you pay the next year to rise. If your account is high, then the rate usually stays the same or close to the same for the next year.
EXAMPLE: Let’s say you have a 2.5% SUTA rate for the year. That means your practice is paying $375 (2.5% x $15,000) for the year per employee for MA SUTA. If an employee is approved for unemployment and your account goes low, then MA may raise your rate. Assuming your rate increases to 3.5% for the next year, then your practice will pay a maximum of $525 (3.5% x $15,000) for the year per employee.