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SECTION VI. - Contribution RatesTax Rates for 2002Contribution Rates - Applicable to Contributing Employers Only Newly Liable Employer Contribution Rates Experience Rated Employer Contribution Rates Negative Account Balanced Employers Recaptured Employers Notification of Charges Notification of Rates Voluntary Payments Transfer of Employer's Experience Account Mandatory Partial Transfer Prohibited Transfers Employer Handbook Index Next Section Contribution Rates - Applicable to Contributing Employers OnlyAll Kansas employers, determined liable under the "contributing" provision of the Kansas Employment Security Law, pay into the Unemployment Trust Fund maintained to distribute unemployment insurance benefits to qualified unemployed workers. The majority of employers, called contributing employers, finance their unemployment tax liability by paying contributions determined by multiplying a specified contribution rate times a taxable payroll determined on an $8,000 wage base earned by each employee during a calendar year. Contributing employers submit, quarterly, form K-CNS 100, Quarterly Wage Report and Unemployment Tax Return, to report wages and pay the amount of tax due. Employer Handbook IndexNewly Liable Employer Contribution RatesA newly liable contributing employer is assigned the larger tax rate determined by alternative methods. The tax rate may be the average rate assigned to all employers plus one percent. Or the rate may be the average rate for employers in a comparable industry plus one percent. The tax rate can not be lower than two percent. After three years, when original liability is established before July 1st, the employer will have a tax rate computed with experience rate factors. When liability is established after June 30, the employer will have a computed rate after four years. Employer Handbook IndexExperience Rated Employer Contribution RatesExperience rating is a procedure for varying employer rates and allocating costs of the unemployment insurance program in relation to the employer's actual and potential risk with unemployment. This is accomplished by the department keeping an individual experience rating account for each liable employer. All tax payments are added and all benefit charges are subtracted from the experience rating account. This provides an opportunity for contributing employers to "earn" a tax rate based on their own individual experience and their potential risk of unemployment. The procedure also helps to ensure an adequate trust fund balance. At the close of each fiscal year, June 30, computations are begun on each contributing employer's tax rate for the succeeding calendar year. This computation involves the following steps and factors.
An employer's basic contribution rate is fixed according to the reserve ratio table in the law. The basic rate is then adjusted as provided in the so-called "size of fund control" formula in the law which compares the total payroll with the size of the Employment Security Trust Fund. Employers with a positive balance and eligible for computed rates are divided into 51 groups in accordance with the relative size of their reserve ratio in comparison to all other eligible positive-balanced contributing employers. Each rate group contains approximately 1.96 percent of the taxable wages paid by all eligible employers. These employers are placed in order or "arrayed" by reserve ratio with the highest placed in rate group 1 and the lowest at the bottom in rate group 51. The higher the reserve ratio, the more favorable the contribution rate. Back to TopEmployer Handbook IndexNegative Account Balanced EmployersWhen the benefits charged to an employer's account exceed taxes paid and credited to that account, tax rates are based upon the employer's negative reserve ratio. All eligible contributing employers with a negative account balance are assigned the maximum rate provided in the law of 5.4 percent and are not included in the experience rate computation previously outlined. In addition to the maximum rate, negative account balanced employers are subject to a surcharge. The surcharge is based upon the size of the employer's negative reserve ratio with a minimum of 0.2 percent to a maximum of 2.0 percent. Therefore, the rates will range from 5.6 percent to 7.4 percent. Employer Handbook IndexRecaptured EmployersA recaptured employer is an employer who is subject to the Kansas Employment Security Law and resumes paying wages after having not paid wages for a period of at least one year. The Kansas Employment Security Law allows employers to recapture their experience rating factors after they have reestablished a new period of 24 months of benefit chargeable immediately preceding the computation date of June 30. The new period begins on the date the employer resumes paying wages. If the employer resumes paying wages in a year in which a rate has been computed, the computed rate will be used for the balance of that year. If a rate cannot be computed, the employer will be assigned the rate of rate group 51. If the employer is a negative account employer, a rate of 7.40 percent will be assigned. After the new period of 24 months of benefit charge ability has been established, the rates will be computed in the same manner as any other employer eligible for an experience computed tax rate. IMPORTANT NOTE: To avoid being classified as a recaptured employer and being assigned the maximum rate indicated in rate group 51, an employer must pay some wages during each calendar year. Employer Handbook IndexNotification of ChargesIn September of each year, form K-CNS 403, Notice of Benefit Charges, is mailed to all contributing employers. This notice is a statement of an employer's pro rata share of all benefit payments charged to their experience rating account during the 12 month period immediately preceding the computation date of June 30. These benefit charges will be used in the computation of the next calendar year contribution rate. Each employer should examine this notice carefully to insure its accuracy. Any questions regarding the pro rata charge of benefits, or a request for a predetermination of a benefit charge must be made within 15 days from the mailing date of this notice. The employer's correspondence and any supporting documentation should be directed to: Kansas Department of Labor, ATTN: Benefits Unit, 401 SW Topeka Boulevard, Topeka, KS 66603-3182. Employer Handbook IndexNotification of Contribution RatesIn December of each year, form K-CNS 404, Experience Rating Notice, is mailed to all Contributing employers. This notice provides each employer with essential information concerning the status of the employer's experience rating account and the contribution rate for the next calendar year. The determination of the contribution rate becomes conclusive and binding upon an employer unless within 15 days from the mailing date of this notice, the employer requests a review and predetermination and sets forth in writing the reasons for the request. Back to TopEmployer Handbook IndexVoluntary PaymentsEmployers are permitted to make voluntary contributions for the purpose of obtaining a more favorable contribution rate. As part of the Experience Rating Notice, each contributing employer receives a "voluntary contribution computation." An employer may, within a 30-day period immediately following the date of mailing, make a voluntary contribution to their experience rating account for the purpose of obtaining a reduced rate. The voluntary contribution computation provides the employer with the exact amount necessary; however, the employer must determine if the voluntary contribution payment is beneficial. The reduction in the experience rate resulting from voluntary contributions for positive account balanced employers cannot exceed five rate groups. Negative account balanced employers may make a voluntary contribution in the amount of their negative balance and receive the rate of group 51, or make an additional voluntary payment to reduce the rate to that of groups 50 through 47. Such voluntary contributions will be credited to the employer's experience account and the experience rate for the current calendar year will be recomputed. Voluntary contributions are not refundable, nor can they be used to offset FUTA taxes. Employer Handbook IndexTransfer of Employer's Experience AccountWhen all or part of a subject employer's organization, trade or business is transferred to another, several provisions of the Kansas Employment Security Law control the transfer of the experience factors. Mandatory Transfer:A mandatory transfer of a predecessor employer's experience rating factors is required whenever the successor employer is substantially owned or controlled by the same interests. Some examples when mandatory transfer applies are:
Voluntary Transfer:When both parties to the transfer represent different interests, the successor employer may make a voluntary Election within 120 days of the date of transfer to receive the predecessor experience rating factors. Partial Transfer:When a successor acquires less than 100 percent of an employer's annual payroll and intends to continue the acquired part as an ongoing business, a partial transfer of experience rating factors can be made if:
Employer Handbook IndexMandatory Partial TransferA mandatory partial transfer of a predecessor employer's experience rating factors is required when an employing unit acquires less than 100 percent of an employer's annual payroll and the partial successor employing unit is controlled substantially by the same interests as the predecessor employer and intends to continue the acquired portion as an ongoing business. When the successor already has a contribution rate applicable to the year in which the transfer occurs, that rate will remain unchanged for the year. However, the following year's rate will be based on the combined experience of the predecessor and successor. A successor establishing liability as of the date of change, electing a transfer of factors, will be assigned the rate of the predecessor for the balance of the calendar year. Employer Handbook IndexProhibited TransfersUnemployment experience may not be transferred, and a new employer rate (or the state;s standard rate) will be assigned, when a person who is not an employer acquires the trade or business of an existing employer. The prohibition applies only if the department finds that such person acquired the business solely or primarily for the purpose of obtaining a lower rate of contributions. The law provides civil and criminal penalties for employers attempting to manipulate their rate and other persons knowingly giving advice leading to such violations. Back to Top |
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