STATE OF NEVADA

The Nevada Department of Employment, Training and Rehabilitation is a proactive workforce & rehabilitation agency

STATE OF NEVADASTATE OF NEVADA

Department of Employment, Training and Rehabilitation

Employment Security Division

Unemployment Insurance Tax Rate Schedule

2015

Small Business Impact Statement

Edgar Roberts – Chief of Contributions Small Business Workshop

October 28, 2014


Small Business Workshop

The purpose of this Small Business Workshop is to discuss the proposed Unemployment Insurance Tax Rate schedule for calendar year 2015.

A small business is defined by NRS 233B as having 149 employees or less.

On October 8, 2014, the Employment Security Council recommended the average tax rate would be set to 2.00%.

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Proposed Regulation

This regulation affects all Nevada employers subject to Nevada’s Unemployment Compensation Law that pay a tax rate subject to the experience rating system.

This constitutes approximately 37,328 employers or 62% of the total employers registered.

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4 ESTIMATED REVENUE And Employer Distribution

CALENDAR YEAR 2014

1.6 Increments

# OF # OF ELIGIBLE

TOTAL SMALL TAXABLE

RESERVE RATIO TAX ELIGIBLE EMPLOYERS WAGES REVENUE

Class From To RATE EMPLOYERS % AT 2.00% % ($MILL) % ($MILL)

18 < -13.7 5.40% 3,256 8.7% 3,202 8.8% $839.48 3.3% $45.33

17 -13.7 -12.1 5.05% 254 0.7% 247 0.7% $66.14 0.3% $3.34

16 -12.1 -10.5 4.75% 299 0.8% 295 0.8% $81.40 0.3% $3.87

15 -10.5 -8.9 4.45% 356 1.0% 344 0.9% $94.12 0.4% $4.19

14 -8.9 -7.3 4.15% 388 1.0% 383 1.1% $132.28 0.5% $5.49

13 -7.3 -5.7 3.85% 516 1.4% 504 1.4% $162.80 0.6% $6.27

12 -5.7 -4.1 3.55% 659 1.8% 640 1.8% $208.59 0.8% $7.40

11 -4.1 -2.5 3.25% 820 2.2% 801 2.2% $279.82 1.1% $9.09

10 -2.5 -0.9 2.95% 916 2.5% 888 2.4% $386.67 1.5% $11.41

9 -0.9 0.7 2.65% 1,266 3.4% 1,217 3.4% $546.93 2.1% $14.49

8 0.7 2.3 2.35% 1,505 4.0% 1,435 4.0% $704.66 2.8% $16.56

7 2.3 3.9 2.05% 2,021 5.4% 1,878 5.2% $1,030.27 4.0% $21.12

6 3.9 5.5 1.75% 2,648 7.1% 2,443 6.7% $1,470.37 5.8% $25.73

5 5.5 7.1 1.45% 3,263 8.7% 3,038 8.4% $1,427.12 5.6% $20.69

4 7.1 8.7 1.15% 3,783 10.1% 3,621 10.0% $1,338.09 5.3% $15.39

3 8.7 10.3 0.85% 3,937 10.5% 3,891 10.7% $849.66 3.3% $7.22

2 10.3 11.9 0.55% 3,598 9.6% 3,594 9.9% $422.28 1.7% $2.32

1 11.9 > 0.25% 7,843 21.0% 7,839 21.6% $417.19 1.6% $1.04

Total Eligible Employers 37,328 100% 36,260 100% $25,439.00 41.0% $491.77

New Employers 2.95% 22,799 $1,845.00 $54.42

TOTAL 60,127 $27,284.00 $546.19

Avgerage UI Rate 2.00%

C.E.P 0.05%

Total Tax Rate 2.05%


Proposed Regulation Continued

This regulation will continue to support the UI system, which has paid nearly $400 million in regular unemployment benefits to Nevada’s workers in the past year.

This regulation will continue to allow many experience-rated employers to pay contributions at a rate lower than the new employer rate of 2.95%.

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Direct Impact

The principal cause of any major change in an employer's SUTA tax rate is due to changes in their own reserve ratio and experience with unemployment.

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Direct Impact

The average tax rate of 2.00% is expected to generate approximately $546 million for the Unemployment Compensation Trust Fund during calendar year 2015.

Taxable wages of small businesses account for 41% of all taxable wages in the State. Approximately $221 million of the total revenue will be attributable to small businesses with the average rate of 2.00%.

The impact of the proposed 2.00% average tax rate is unique to each employer based on their previous experience with unemployment.

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Indirect Impact

Implementing a 2.00% average rate will continue the stability of the overall tax for employers.

The prior bonding solution has eliminated the mandatory federal tax increases under the Federal Unemployment Tax Act commonly known as (FUTA) and has also restored the full 5.4% credit to employers.

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Rate - Impact on Small Businesses

The tax methodology used for Nevada’s Unemployment Compensation Program is based on an experience rating system approved by the U.S. Department of Labor.

This rating system is designed to ensure that employers are fairly rated based on their unique experience with unemployment, regardless of size or industry type.

Having a federally approved rating system allows employers an offset credit against their Federal Unemployment Tax. This is a savings of nearly $400 million per year to Nevada employers.

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Estimated Cost for Enforcement

There is no additional cost for the enforcement of this regulation.

NAC 612.270 is adopted each year to set employer contribution rates and is required by NRS 612.550.

Funds for the administration of the Unemployment Compensation Program are provided by the U.S. Department of Labor.

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Anticipated Revenue & Regulation

The average UI tax rate of 2.00% is expected to produce $546 million for the trust fund in calendar year 2015. Small businesses will account for $221 million of the total revenues.

This regulation does not duplicate or provide a more stringent standard than any other regulation of federal, state, or local governments.

This concludes my presentation.

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STATE OF NEVADA