Claimant FAQ's | Employer FAQ's
- What is the definition of "employer"?
- How does my business register as a "new" employer?
- What are taxable wage inclusions and exclusions?
- What is a "reimbursable" employer (not-for-profit and government entities)?
- What if my business has employees working in several states?
- How are my tax rates determined?
- How does my business file quarterly reports and returns?
- What is magnetic media reporting?
- How are benefits charged to the employer account?
- How can my business file a protest or ask a question about the employer account?
- Can my business get information about the employer account over the telephone?
An "employer" is an individual or employing unit, which employs one or more individuals for some portion of the day. Besides the multitude of regular employers, such as manufacturers, retailers, etc., it also includes special types of employment that are sometimes overlooked by employers. These types and liability requirements are:
- Agricultural Employer - If during any calendar quarter of the current or preceding year paid cash remuneration of $20,000 or more to individuals performing agricultural labor; or employed at any time 10 or more individuals for a portion of a day in any 20 weeks in the current or preceding calendar year.
- Domestic employer - If during any calendar quarter of the current or preceding calendar year there is a total payroll of $1,000 or more to an individual(s) performing domestic service.
- Farm Crew Leader - If crew leader holds a valid certificate of registration under the Farm Labor Contractor Registration Act of 1963; or the crew leader provides mechanized equipment which substantially all the individuals operate or maintain, provided the individuals are not employees of another employer.
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:
- The individual who performs the work is free from control and direction over its performance both in fact and under the contract;
- The individual customarily is engaged in an independent business or occupation of the same nature as that involved in the work; and ,
- The work is: (a) outside the usual course of business of the person for whom the work is performed, or (b) performed outside any place of business of the person for whom the work is performed.
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:
- Barbers and Beauticians
- Taxicab Drivers
- Some Maritime Employment
- Church Employees
- Certain Governmental Employees
- Railroad Employment
- Insurance Sales for commission only
- Real Estate Sales for commission only
- Direct Sellers
- Foreign Employment
- Other Unemployment Insurance Programs
- Work-Relief and Work-Training
- Family Members in proprietorships
- Hospital Patients
- Students Nurse and Interns
You can open an unemployment insurance employer account by filing a Form UC-1 "Report to Determine Liability and if Liable Application for Employer Account Number". Employers should submit a Form UC-1 no later than 20 days after the first day of business. This single registration form covers obligations to seven State agencies. The employer only completes sections that apply to his/her business. To request a registration form, call the Unemployment Insurance Employer Contributions Unit (302) 761-8484 or download the form from this web site.
Taxable wages include total remuneration paid up to the taxable wage base limit of $10,500 before any deductions are made.
The following wages are taxable:
- Meal and lodging provided by an employer to an employee, unless the meals and lodging are provided on the employer's premises for the employer's convenience.
- Tips which are reported pursuant to Section 6053 of the Internal Revenue Code.
- Payments to workers for: (a) dismissal; (b) vacations; (c) sick leave; and (d) Bonuses
The following payments are not to be reported:
- Employer payments, without deduction from the employee's wages, for Retirement, Sickness or Accident disability insurance or medical insurance.
- Payment by the employer, without deduction, of the employee's Social Security Taxes
- Vacation pay paid incident to or during a period of unemployment
- Attendance bonus paid during or incident to any period of unemployment.
- Wages of a sole proprietor, his/her spouse and children of the sole proprietor under 18 years old, and owner's parents.
- Wages of partners.
- Wages earned by an individual who is enrolled in a full-time educational program that combines academic instruction with work experience, which is an integral part of the educational program.
If you have questions concerning the inclusions and exclusions listed, please call the Unemployment Insurance Employer Contributions unit at (302) 761-8484.
Not-for-profit organizations classified under Section 501(c)(3) and exempt from income tax under Section 501(a) of the Internal Revenue Code, and state and local government entities and subdivisions may elect to finance their UI costs by reimbursing the state dollar for dollar for benefits charged against their accounts, in lieu of paying quarterly UI taxes. Not-for-profit organizations are required to post a bond of a specific dollar amount. Questions concerning not-for-profit status and/or requirements may be directed to 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.
Services performed within this state, or both within and without this state are to be reported to Delaware if:
- The service is localized in Delaware; or,
- When there is employment in more than one state and some service is performed in the state where the base of operations is located, then the earnings are to be reported to that state where the individual's base of operations is located. If no services are performed in the state with the base of operations and some services are performed in the state where direction or control is received, then the earnings are to be reported to the state where the individual's direction or control is received. If there are no services performed in the state where the base of operations is located or where direction or control is received, then the individual's state of residence is to be used.
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.
Delaware employers are assigned one of four different types of tax rates: the new employer rate, the delinquent rate, the earned rate and the transfer of experience rate.
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:
- Reorganizations - This is when a new employing unit is formed. The assets, employees, and business or trade are the same under the new organization as they were under the old. The new organization retains the contribution rate and has the same liabilities as before the changeover.
- Successorship - If an existing employing unit acquires the assets, business, organization, or trade of another employing unit, the acquiring employing unit is known as a successor employer.
- An employing unit transferring by sale or otherwise, all or part of the organization, trade, business, or assets to another employing unit or employing units is known as a predecessor employer.
- Commencing January 1 after the transfer, the successor's rate of contributions for each calendar year is based on its experience with payrolls and benefit charges combined with the experience with payrolls and benefit charges of the predecessor. The successor is liable for all contributions, interest and penalties owed by the predecessor employer at the time of the transfer.
- A person who is not an employing unit at the time of acquisition of a business, trade, or organization whether in full or in part will be assigned a new account rate.
- A person who is not an employing unit at the time of transfer of a business, trade, or organization and is substantially the same ownership, will be given the experience rate of the previous business, trade, or organization. For example, in a partnership when one partner buys out another partner and the remaining partner retains the majority interest in the previous business.
Note: Pursuant to legislative change regarding the transfer of experience rate, the following will be effective January 1, 2006:
- If an employer transfers its trade or business, or a portion thereof, to another employer and, at the time of the transfer, there is any common ownership, management or control of the two employers, then the unemployment experience attributable to the transferred trade or business shall be transferred to the employer to whom such business is so transferred. The rates of both employers shall be recalculated and made effective immediately upon the date of the transfer of trade or business.
- Whenever a person who is not an employer under Delaware's Unemployment Insurance Law at the time the trade or business of an employer is acquired, the unemployment experience of the acquired business shall not be transferred to such person if the division finds that such person acquired the business solely or primarily for the purpose of obtaining a lower rate of contributions. Instead, such person shall be assigned the applicable new employer rate under §3348 of Delaware's Unemployment Insurance Law. In determining whether the business was acquired solely or primarily for the purpose of obtaining a lower rate of contributions, the division shall use objective factors which may include the cost of acquiring the business, whether the person continued the business enterprise of the acquired business, how long such business enterprise was continued, or whether new employees were hired for performance of duties unrelated to the business activity conducted prior to acquisition.
For additional information regarding employer tax rates, call the Unemployment Insurance Employer Contributions Unit at (302) 761-8484.
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:
- Receive maximum credit for your state payments against Federal Unemployment Tax (FUTA) payments;
- Receive credit for your payroll in "experience rating"; and,
- Avoid interest charges at a rate of 1.5% per month for late payments and a penalty assessment of $17.50 for each late report.
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.
Delaware employers may submit quarterly wage information on magnetic media. For more information, call the Unemployment Insurance Employer Contributions Unit at (302) 761-8484.
When an individual files a claim for benefits, two determinations are made. The first is a monetary determination of the amount of benefits the claimant may receive based on his/her wages paid in a specified time period (base period). The second is a nonmonetary determination that considers the claimant's eligibility for benefits and reason for separation from employment. Both determinations affect the charging of benefits against an employer's account.
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:
- Base Period Gross Wages Paid by the Employer - The base period is defined in Delaware's Unemployment Insurance Law as the first four of the last five completed calendar quarters prior to the filing of the claim, and is used to establish eligibility for benefits.
- Percent of Liability - If a claimant has only one employer in the base period, that employer's account would be charged for 100% of any benefits paid and chargeable. If the claimant had two or more employers during the base period, each employer's liability would be determined by the total gross wages paid by all base period employers.
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.
Employers can appeal a liability determination, a benefit charge, or a tax rate assignment in writing within 15 days of the decision. Follow instructions indicated on the forms you receive to determine the proper address to which to submit your appeal.
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.
Call the Unemployment Insurance Employer Contributions Unit at (302) 761-8484.
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.s