What is Unemployment Insurance?
Who Must Pay?
Unemployment Insurance Rates
Taxable Wage Base
Transfer of Experience Record
How Do I Control My Costs?
Independent Contractor Criteria
Frequently Asked Questions (FAQ'S)
Nevada Revised Statutes (NRS)
Nevada Administrative Code (NAC)
Alternate Base Period
Unemployment Insurance is a Federal/State insurance system
established to protect workers by paying benefits during periods of
involuntary unemployment and aid the business community by
stabilizing the available work force. The system is funded through
payroll taxes on employers.
Who Must Pay?
Generally, any employing unit that has paid wages for employment in
Nevada of $225 or more during any calendar quarter must register
with the Employment Security Division, and pay taxes on those wages.
general, an "employing unit" means any individual or type of
organization, including any partnership, association, trust, estate,
joint-stock company, insurance company, corporation, or a receiver
or trustee in bankruptcy.
"Employment" means service, including service in interstate
commerce, performed for wages or under any contract of hire, written
or oral, express or implied.
Unemployment Insurance Rates:
Employers starting a new business in Nevada must pay unemployment
insurance (UI) tax at a rate of 2.95 percent (.0295) of wages paid
to each employee up to the taxable wage limit. The employer retains
this rate for a period of 14 to 17 calendar quarters (depending on
the quarter in which he becomes subject to the law), after which his
rate will be determined under the "Experience Rating" system. There
is an additional .05 percent (.0005) tax for the Career Enhancement
Taxable Wage Base:
Employers are taxed on wages paid to each employee up to the taxable
wage base in effect during a calendar year. The tax base is
calculated annually, and is equal to 66 2/3 percent of the average
annual wage for Nevada employees. Although the total wages paid to
each employee must be reported to the division each quarter, any
wages paid to an individual which exceed the taxable wage base
during the calendar year are not taxed.
The taxable wage base is as follows:
Once an employer becomes eligible for "experience rating," he will
receive one of 18 unemployment insurance (UI) tax rates, ranging
from .25 percent to 5.40 percent of taxable wages. Each employer's
tax rate may vary from year to year, depending on previous
experience with unemployment and the rate schedule in effect.
Nevada uses the "Reserve Ratio" formula to determine previous
experience, which is the method used by a majority of the states.
The Employment Security Division maintains a permanent "Experience
Record" for each employer, consisting of accumulated taxes paid,
accumulated benefits charged to his account, and average taxable
payroll for the prior 3 years. Each year, the employer's reserve
ratio is calculated from his experience record to determine his tax
rate under the schedule in effect. Generally, the higher the reserve
ratio, the lower the employer's tax rate will be.
Reserve Ratio Formula
Contributions Paid - Benefits
Average Taxable Payroll, Prior 3 years
$10,000 - $6,000 = .10, or 10.0% Reserve Ratio
Transfer of Experience Record:
an employer purchases a Nevada business, the experience record of
the seller may be transferred to the buyer upon mutual written
consent. The purchaser must notify the Employment Security Division
within 90 days after the acquisition, and the joint application to
transfer must be submitted within one year after the date of
issuance by the division of the official notice of eligibility to
Until the transfer of the experience record is completed by the
division, the unemployment insurance rate will be 2.95 percent
(.0295) of the taxable wages. If this results in an overpayment, the
employer account will be credited, or a refund may be requested.
How Do I Control My Costs?
There are a number of things you can do to help control your costs,
all of which impact your "reserve ratio" or the unemployment
insurance trust fund. Generally, the higher your reserve ratio, the
lower your taxes will be:
· Pay your taxes on time. This is a factor used in your
"reserve ratio" calculation. (Timely payment also ensures full
credit against your Federal Unemployment Tax.)
· Respond to division notices timely, honestly, and
accurately. Whether benefits are paid, and how much, are often
determined by employer responses. Without sufficient facts, the
division must act on whatever information is available. Benefits
paid in error will likely impact your future tax rates.
If you feel a determination form the division is in
error, file a timely appeal and attend all hearings.
· Review your benefit charges and tax rate notices
carefully for errors.
· Keep accurate, written personnel records of your
employee's performance and conduct. Be particularly specific when
responding to the division regarding reasons for separations.
· Offer job openings to unemployed workers, if possible.
This reduces overall cost and possibly your individual tax rate.
Take advantage of our free services at Job Connect offices located
Avoid layoffs whenever feasible. Workers could possibly
be used temporarily in a part-time position or in some other
capacity. Contact other employers in your industry for possible job
· Notify the division if an unemployed claimant refuses
suitable work, or any other instance you think an individual is
abusing the system
Independent Contractor Criteria:
Nevada Unemployment Compensation Law does not define "independent
contractor." It uses what is commonly referred to as the "ABC" test.
This test is unique to the Unemployment Compensation Program. Unless
otherwise specifically excluded, payment for personal services is
deemed subject to unemployment taxes unless the following conditions
are met. All three conditions must be met in fact; a written
contract alone is not sufficient. The burden of proof rests upon the
employer to demonstrate the existence of these conditions:
The person has been and will continue to be free from
control or direction over the performance of the services, both
under his contract of service and in fact; and
The service is either outside the usual course of the
business for which the service is performed or that the service is
performed outside of all the places of business of the enterprise
for which the service is performed; and
The service is performed in the course of an
independently established trade, occupation, profession or business
in which the person is customarily engaged, of the same nature as
that involved in the contract of service.
you cannot demonstrate the above conditions, the person is an
employee. A written contract, in itself, does not establish
"independent contractor" status. If in doubt, contact the
Contributions Section for a ruling.
Alternative Base Period
State legislation has been signed into law by Governor Jim Gibbons,
which will ensure the State of Nevada receives federal benefits
available for unemployment compensation pursuant to the American
Recovery and Reinvestment Act of 2009.
The change to Nevada Revised Statute 612.025 adapts an alternate
base period for determining entitlement to unemployment insurance
benefits. A standard base period for a benefit claim is
defined as the first four of the last five completed calendar
quarters. If a claimant is monetarily ineligible under a
standard base period, the law change allows wages paid in the most
recently completed calendar quarter to be considered for determining
entitlement. Therefore, the most recently completed four
calendar quarters will be used as the "alternate base period."
The impact of
the law change for Nevada employers is that you may be asked to
provide wage information for a specific former employee, for the
most recently completed quarter, prior to the usual quarterly
reporting due dates.
if you supply wage information "early" for an alternate base period,
you must report that same information when you file and pay your
quarterly unemployment insurance tax report.
information is needed prior to the usual due date for the Employer's
Quarterly Contribution and Wage Report, you will receive a request
to provide the total amount of gross wages and any tips paid during
the most recently completed quarter. The most likely months in
which additional requests will be necessary are the months prior to
each reporting cycle:
January - wages for the 4th
quarter, prior to January 31 due date
April - wages for the 1st
quarter, prior to April 30 due date
July - wages for 2nd quarter,
prior to July 31 due date
October - wages for the 3rd
quarter, prior to October 31 due date
cooperation in supplying wage information, if requested, is
important. The quarterly wages are necessary to determine a
person's entitlement to unemployment insurance benefits and, if
claimant is eligible, will allow the benefits to begin without