|When Reserve Ratio is
||But Less Than
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," they 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.
Like most states, Nevada uses the "Reserve Ratio" formula to determine previous experience. The Employment Security Division maintains a permanent "Experience Record" for each employer, consisting of accumulated taxes paid,
accumulated benefits charged to their account, and average taxable payroll for the prior 3 years. Each year, the employer's reserve
ratio is calculated using their experience record to determine the 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 Charged
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. A 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 Employers Control Their Costs?
There are a number of things employers can do to help control costs,
all of which impact their "reserve ratio" or the unemployment
insurance trust fund:
· Pay unemployment insurance taxes on time. This is a factor used in "reserve ratio" calculations. (Timely payment also ensures full credit against the employers 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 the employer's future tax rates.
Employers who feel a determination from the division is in
error should file a timely appeal and attend all hearings.
· Review benefit charge statements and tax rate notices carefully for errors.
· Keep accurate, written personnel records of 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 the employer's individual tax rate.
Take advantage of the free statewide services offered by the Division's Job Connect offices.
Avoid layoffs whenever feasible. Workers could possibly
be used temporarily in a part-time position or in some other
capacity. Contact other employers in the same industry for possible job
· Employers must notify the division if an individual refuses
suitable work, or any other instance of system abuse.
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. A written contract, in itself, does not establish "independent contractor" status. 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/her 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.
the above conditions cannot be demonstrated, the person is an
employee. If in doubt, contact the Contributions Section at (702) 486-0250 for additional assistance.
Alternative Base Period:
Nevada Revised Statute 612.025 allows 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 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."
Nevada employers 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 an alternate base period claim is filed.
Note: Even if an employer supplies wage
information "early" for an alternate base period, they must report that same information when they file and pay their
quarterly unemployment insurance tax report.
information is needed prior to the usual due date for the Employer's
Quarterly Contribution and Wage Report, the employer 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
Timely 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 delay.