Tips & info

Base year wages

July 2003

Quiz question:An employee leaves your organization and is not eligible for unemployment benefits. After being hired by another employer, they leave that employer under circumstances that make them eligible for unemployment. Can your organization be charged for any portion of the unemployment benefits?

Although it doesn't seem fair, in most states the answer will be "yes." The cost of unemployment benefits is shared by prior employers regardless of whether or not the employee would have been eligible for benefits when their earlier employment ended.

Base year wages and employer liability

Each state has its own set of requirements that affect how unemployment benefits are charged to reimbursing employers. In a few states, all benefits are charged to the claimant's most recent employer. But most states spread the cost according to wages paid during the "base year." The "base year" is the twelve-month period consisting of the first four of the last five completed quarters.

As an example, for a claim filed on May 2, the base period is the first 4 of the last 5 quarters.

What this means to you as an employer is that you may be charged for benefits for a prior employee regardless of how the employee's service with you ended. Base period claims relate to employees who have worked for a different employer after leaving your organization. At the time they left your employment, they may not have been entitled to unemployment benefits. Since then, they have left another employer under circumstances that now make them eligible for unemployment. The benefits they receive will be spread among all prior employers according to the amount of wages paid during the "base year."

You may have experienced the frustration of a base period claim that resulted in your account being charged with benefits despite the fact that the employee was not eligible when they left your employment. Our sense of fair play is violated and it becomes harder to deal with a case on its clinical merits. But if you know the rules, you can focus your time and effort where you can do the most good.

On the other side of the coin, if a new employee is not meeting your needs and is terminated within 90 days, you will generally not be considered a base year employer and will not be charged with any benefits the employee is paid as a result of your termination.

Base year wages and employee eligibility

When individuals file for unemployment benefits, they establish a "benefit year" that extends approximately 52 weeks. Claimant eligibility during a benefit year is determined by the amount of work performed and wages earned during the "base year." The base year is the twelve month period consisting of the first four of the last five completed quarters. Generally speaking, state monetary eligibility is directly related to a claimant's "usual wage" during the base year and the benefit represents approximately a 50% wage replacement up to the maximum amount.

As an example, for a claim filed on May 2, the base year period is the first 4 of the last 5 quarters.

If an employee returns to work before receiving all their benefits and subsequently becomes unemployed prior to the expiration of their initial 52 week benefit year, they may reopen their initial claim for benefits against the original base year and may be eligible for further benefits. In addition, after the initial 52 week benefit year an individual could file a new claim resulting in the latter part of their new base year having some wages from their previous employment with you. This would result in additional liability but in a reduced amount from the initial claim.

Call your UC Express claims representative for assistance!
Malie Salas Amy Darboe
Claims Representative Claims Representative
(800) 955-4351, ext. 5 (800) 955-4351, ext. 3
Direct Fax: (866) 226-2359 Direct Fax: (866) 229-1320
Email: Msalas@talx.com Email: Adarboe@talx.com