Employment is defined as any service performed for remuneration (payment) whether full-time or part-time. This also includes salaries paid to corporate officers who are employees of the corporation (including close and subchapter S corporations).
One of the most common employment exclusions is an “independent contractor.” The criteria for independent contractor status are:
When independent contractor status is in question, employers should determine if the person has a Federal Identification Number. Independent contractors are required to file business tax returns and have a Federal Identification Number.
The following categories are specific exemptions from covered employment under the Delaware Unemployment Insurance Law provided certain criteria are met:
The following wages are taxable:
The following payments are not to be reported:
If you have questions concerning the inclusions and exclusions listed, please call the Unemployment Insurance Employer Contributions unit at (302) 761-8484.
The election of the reimbursement method for newly formed not-for-profit organizations must be made in writing to the agency within 30 days of coverage under the law. Once electing the reimbursement method, Delaware law only permits an employer to change his/her option on written notice to the Department not less than 30 days prior to January 1 of the year the new options becomes effective (if approved).
Billing for benefits chargeable to the not-for-profit organization or government entities is made via the Notice of Benefit Payments Charged to Your Experience Rating Account This quarterly statement lists all claimants collecting benefits during the previous quarter. Organizations receiving this form have 15 days from the “Date of Invoice” to file a written protest. Interest is charged for late payments.
A. Services performed within this state, or both within and without this state are to be reported to Delaware if:
The objective is for all services performed by an individual for a single employer to be covered under one state law, wherever the services are performed. Employers may elect to cover an employee through a Reciprocal Coverage Agreement between states. For additional information, contact the Unemployment Insurance Employer Contributions Unit (302) 761-8484.
New Employer Rate:
“New Employer” means an employing unit that does not qualify for an earned rate. The tax rate for a new employer will be the average of the rates for all employers in the State during the last five years. Construction companies headquartered in another state will be assigned a tax rate that is the average of the rates for all construction employers in Delaware during the year for which the rate is assigned.
If an employer is eligible for an earned rate, and the employer failed to file its quarterly tax and wage reports, the employer is assigned the Penalty rate.
After an employer has paid wages to employees in two fiscal years (July 1 to June 30) prior to the computation date (July 1st prior to the rated year), he/she is entitled to be assigned a tax rate reflecting his/her own experience with layoffs. If the employer’s former employees receive benefits regularly which result in benefit charges, the employer will have a higher tax rate. On the other hand, employers that incur little or no benefit charges will have lower tax rates.
The earned rate is based on two elements. The first is called the basic rate and it is determined by finding the ratio between the benefits charged to your account and the taxable wages that you reported in three fiscal years prior to the computation date. If you have only been in business for two fiscal years prior to the computation date, just the experience in those two years is used. The benefit ratio then converts to a basic rate according to the “Table of Basic Rates” in the Delaware Unemployment Insurance Law.
The second component of your earned rate is a supplemental assessment rate which is based on the balance in the UI Trust Fund.
Transfer of Experience Rate:
Frequently, an employer will acquire a business from a previous owner or the employer will reorganize a business. All Employer “Experience Rate Notices” are issued in January for tax year January 1 through December 31. The effect of various transactions on the employer’s contribution rate are summarized below:
Note: Pursuant to legislative change regarding the transfer of experience rate, the following will be effective January 1, 2006:
For additional information regarding employer tax rates, call the Unemployment Insurance Employer Contributions Unit at (302) 761-8484.
A. Delaware employers are required to report the amount of total “gross wages” paid each quarter on the “Forms UC-8 and Form UC-8A” Gross wages include all remuneration for personal services, including commissions and bonuses and the cash value of all compensation in any medium other than cash. Employers must also calculate and report the amount of total “taxable wages.” For Delaware unemployment insurance purposes, “taxable wages” are defined as the first $10,500 earned by each employee in a calendar year.
You are required to report your payroll and pay unemployment insurance taxes four times a year. Forms UC-8 and UC-8A will be sent to you at the end of each quarter. If you do not receive a blank form, call (302)761-8484. You have one month following each quarter to file reports and pay the tax. You must file on time in order to:
Accuracy when reporting the taxable wages is extremely important. It affects the amount of taxes owed and your tax rate. In Delaware, an employer’s “benefit ratio” is determined by dividing the amount of benefits charged against the employer’s account by the amount of taxable wages.
Delaware employers are required to file wages and tax returns each quarter. Each return covers the activity during the calendar quarter. The return is due by the end of the month following the end of the quarter. Payment is due with the return.
The gross wages paid to a claimant by all employers in the base period are used in determining a UI claimant’s weekly benefit amount (WBA). An employer’s percentage of charging for UI benefits is based on the following elements:
The percentage, times the total amount of wages ultimately received by the claimant while employed, equals your benefit charges. You are notified of the exact amount of charges at the end of each calendar quarter.
Part-time/full-time employment – If a claimant loses his/her full-time job, but continues to work his/her part-time job, partial benefits received by the claimant will not be charged to the part-time employer’s account as long as the claimant remains actively employed. Employers receiving a “Request for Separation Information” Form UC-119 for claimants actively employed on a part-time basis should clearly indicate the claimant’s continued part-time status.
The employer should include in the protest or appeal the employer’s name, the employer’s account number, the name and title of the individual submitting the protest, the date of the protest, and most importantly, the specific factual reason for the protest or appeal. The employer should attach any documentation that supports their contention. The Unemployment Insurance Contributions Unit will respond, in writing, to any appeal that is filed.
You will need your Delaware account number or your federal employer identification number to receive information. It is preferable to use your Delaware account number.