Who Pays for Unemployment in New York State?
The New York State Unemployment Insurance Program allows unemployed residents and non-residents to receive wage compensation benefits if they are unemployed through no fault of their own. The New York Unemployment Insurance Law, Article 18 of the New York State Labor Law, requires employers to fund the state’s unemployment system by paying state employment taxes. Employers may not collect contributions from their employees to help them subsidize their tax liabilities.
To receive unemployment benefits, a recently unemployed resident must show she was terminated through no fault of her own, she is ready to work and actively searching for gainful employment. She must also have worked a sufficient number of hours and earned at least $1,600 in one quarter of the last five. Employees who are unemployed because of misconduct or because of felony-related charges cannot claim benefits.
Once employers hire employees within the state, New York law requires them to contact the New York Department of Labor to determine their individual tax contribution rates and tax liabilities. Depending on their formal business entity and type of business they conduct, employers owe taxes to fund the New York State Unemployment Insurance Program. For instance, nonprofit organizations owe taxes when they begin earning more than $1,000 in taxable profits or when they hire at least four employees. Employers who no longer pay employees and do not have active payrolls can contact the state to close their unemployment tax accounts and will not have to further contribute to the state's unemployment system.
All employees in New York receive coverage under the state unemployment law if they work for an employer on a temporary basis, full-time basis or part-time basis. Domestic employers and small businesses are also required to pay taxes to fund the state’s unemployment program. Generally, the unemployment program benefits employees who work in New York, and dual-state employees may not be able to collect unemployment benefits from the New York Unemployment Commission but must apply for benefits through the other state’s program.
Independent contractors, some education institution employees and nonprofit employees do not receive coverage since their earnings are not taxable. Additionally, federal railroad employees and family business employees, freelancers and licensed insurance agents may receive exclusion from the program. Employers in New York may also participate in a voluntary contribution program where they can receive special business incentives for voluntarily contributing to the unemployment program even though they do not have any legal duties to contribute. Additionally, since employers pay both state unemployment taxes and federal unemployment taxes at 6.2 percent, employers who pay their state quarterly taxes in New York on time can receive a tax credit to offset their federal tax liabilities.
Since employment laws can frequently change, do not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your jurisdiction.