§3303 Conditions of additional credit allowance

Summary

States may let employers get lower unemployment tax rates only if the Secretary of Labor finds the State’s rules meet certain requirements. For pooled or partially pooled accounts, lower rates can be based only on the employer’s unemployment experience or similar risk factors for at least the 3 consecutive years right before the computation date. For guaranteed employment accounts, lower rates are allowed only if the guarantee was met in the year before the computation date, the account balance is at least 2½ percent of the payroll measure for the prior 3 years, and contributions were paid into the account for those 3 years. For reserve accounts, lower rates are allowed only if compensation was paid from the account during the year before the computation date, the balance is at least five times the largest amount paid in any one of the prior 3 years, the balance is at least 2½ percent of the payroll measure for the prior 3 years, and contributions were paid for those 3 years. A certified professional employer organization (defined in section 7705 and treated as the employer under section 3511) may collect and pay contributions for a work site employee under these rules. The Secretary of Labor must certify qualifying State laws to the Treasury each October 31 for the 12‑month period ending that day, may limit certification to just the parts that meet the rules, must respond within 30 days when a State asks, and won’t withhold certification for an October 31 period unless after notice and a hearing the State no longer meets the requirements. States may let voluntary payments count if made within 120 days after the year starts, and 501(c)(3) organizations (exempt under 501(a)) may choose to pay amounts equal to compensation instead of contributions. Employers’ accounts cannot be cleared of charges if the agency finds payments happened because the employer or agent failed to respond timely or has a pattern of failing to respond; States may set other rules too. Key terms (one line each): reserve account — an employer’s separate account that pays compensation for that employer’s workers; pooled fund — a common fund where many employers’ contributions are mixed; partially pooled account — part of a fund that acts like a backup when a reserve or guaranteed account is exhausted; guaranteed employment account — a separate account for an employer who guarantees specified work and pay and provides security; year — any 12 consecutive months; balance — the account amount on the computation date (with certain adjustments); computation date — a date at least once a year and within 27 weeks before new rates take effect; reduced rate — a contribution rate lower than the State’s standard rate; standard rate — the baseline rate used to compute variations.