How are employers unemployment-insurance tax rates calculated?
A. Unemployment taxes in Washington are calculated using a formula that is written in state law. The Employment Security Department does not have independent authority to adjust the rates. There are two components of the state unemployment tax. The largest component of the tax rate for most employers is based on each employer’s layoff history (experience) over the past four years. There are 40 experience-rate classes, and businesses move up or down those classes based on their past layoffs. The second part of the tax rate is called the social-cost tax. It covers unemployment costs that cannot be recovered from specific businesses – so they are shared by all employers (e.g., benefits paid to workers whose company went out of business). During economic recessions, when benefits paid far exceed taxes collected, the social-cost tax also acts like a brake to slow the decline of the trust fund so employers aren’t hit by sharper, more sudden tax increases in the future. For 2010, employers wi
