Experience Rate Information

Reference: Minnesota Law, §268.051 Subd.3 (2007) and §268.051 Subd.4 (2007)

Experience Rating. Experience rating assigns an unemployment insurance tax rate to employers who have paid covered wages for a sufficient period to rate their experience with unemployment insurance. The less unemployment an employer’s workers experience, the lower the unemployment insurance tax rate will be. By relating tax rates to taxable wages and benefits paid charges, experience rating causes each employer to pay at a rate that covers the cost of the unemployment for which the employer is responsible. Experience ratings are computed to the nearest one-hundredth of a percent, to a maximum of 8.90 percent.

Experience Rating Period. To receive an experience rating, an employer must have paid wages for a specific period of time, 48 months. This is called the experience rating period. It ends on June 30 of the year prior to the year for which the rate is computed. For example, experience ratings assigned to employers for 2008 are based on the time period beginning July 1, 2003, and ending June 30, 2007.

Employers are not required to have had employees during the entire 48 month period to receive an experience rating. If an employer paid wages before July 1 of their first year of coverage, they will be eligible for an experience rating in the third year. For example, an employer first paid wages on or before June 30, 2008, they will receive an experience rating in the year 2010.

Experience Rating Successorship. Acquiring a business can affect an employer’s unemployment insurance tax rate if they share 25 percent or more common ownership with a predecessor. Common ownership includes ownership by a spouse, parent, grandparent, child, grandchild, brother, sister, aunt, uncle, niece, nephew, or first cousin, by birth, marriage. Common ownership is assumed if both the predecessor and successor are publicly held corporations.

If an employer acquires all or part of the organization, trade, business or assets of a predecessor and they share 25 percent or more common ownership with that predecessor, the related factors in the predecessor’s experience rating account (i.e. the benefits paid charges and taxable payroll associated with the percentage acquired) will automatically be transferred to the successor’s account. The predecessor’s taxable wages and benefits paid charges will be included when computing the successor’s experience rating in future years. If the successor only acquires a portion of the predecessor’s business, only the related portion of the predecessor’s taxable wages and benefits paid charges will be used to calculate the successor’s future tax rate(s). No transfer will occur without common ownership unless it is found that ownership was transferred to avoid an unfavorable tax rate.

      

This handbook is based on current UI legislation; statements are intended for general information and do not have the effect of law. The Minnesota Unemployment Insurance Law - MN Statutes §268.001 to §268.23 and Administrative Rules 3310 and 3315 - can be accessed through our Web site at www.uimn.org; by clicking on the UI Law link.