Things that small-business employers need to know
Small-business employers need to be aware of a very large abyss that exists between themselves and the Department of Labor Unemployment Insurance Division:
* Who you are or are not required to pay employer taxes on (unemployment insurance, workers’ compensation, temporary disability insurance). Your own salary? Commission-only salespeople?
* Why employees who quit or were let go for a valid reason are often granted unemployment insurance benefits by the Department of Labor.
* How the DOL will treat you, if you have paid yourself a salary or employee taxes on yourself, in the event that you should ever have the misfortune of going out of business.
The biggest black hole is when you are paying yourself a salary and using a co-employer or professional employer organization. Chances are they have not disclosed anything about your DOL status as an “owner-employee,” the caveats that do exist with this status, and the possible options for being excluded from having to pay UI, TDI or WC.
If you are a small employer using a PEO, have them go over your contract in detail and make sure you understand it. Know about “excluded services,” which are types of pay you are not required to pay employer taxes on.
Why? Those people are not allowed to collect UI benefits. For example: Commission-only travel agents/salespeople and maybe you. Your PEO should be on your side and be very happy to make sure you have full disclosure to avoid any errors and omissions.