The following is guest post by Carol Wilson, a blogger/writer who writes on business insurance issues for BusinessInsuranceQuotes, a business insurance connector website. In this guest post, Carol provides an overview of the Massachusetts Unemployment Insurance and Worker’s Compensation requirements. Though not technically state taxes, these mandatory contributions, like taxes, are a cost of doing business that individuals and businesses which hire employees in Massachusetts are subject to.
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Most businesses operating in Massachusetts are required to carry both unemployment and workers’ comp insurance. This post discusses these two employer contributions.
Massachusetts Unemployment Insurance
Anyone who employs one or more workers (regardless of full-time or temporary status) or pays wages of $1,500 per year is generally required to contribute to the Massachusetts unemployment insurance funds.
New businesses are required to register with the Massachusetts Division of Unemployment Assistance (“DUA”). Once wage information is submitted to the DUA, the employer will receive a notice of requirements.
How much are Massachusetts employers required to pay?
Wage Base: The Massachusetts taxable wage base on which unemployment insurance (UI) contributions are based is $14,000 per employee. Employers calculate their UI contribution by multiplying their specific rate times the first $14,000 of an employee’s Massachusetts taxable wages.
Unemployment Insurance Contribution Rate: New employers are given a new employer rate that lasts for two years. Currently, the new employer rate is set at the positive reserve percentage of 10.5 and less than 11. After the introductory period, contribution rates vary from business to business.
The DUA uses the experience rating system to compute employer data and determine annual rates. Rates are determined by factors such as the size of the company’s payroll; number of employees; debits and credits applied to a company’s account; and the amount of reserve funding in both a company’s DUA account as well as the state unemployment compensation fund.
Each employer is provided his individual contribution rate by April 20 of each year.
When are Massachusetts UI payments due?
State UI payments are due quarterly, within 30 days from the end of each quarter.
Massachusetts Workers’ Compensation Insurance
All business owners in Massachusetts are required to carry workers’ compensation policies that protect employees. Self-employed business owners are also subject to this law. This insurance provides medical treatment related to work-related injury or illness.
Which employees is a Massachusetts employer required to insure?
For many businesses, the answer to this question is straightforward. Any and all employees who are hired as temporary, part-time or full-time employees would be covered. However, some cases aren’t so clear.
- Family owned and operated businesses will need workers’ compensation insurance to cover brothers, sisters and other relatives who are working.
- Domestic service employees need to work at least 16 hours per week to require coverage.
- When hiring subcontractors and independent contractors, businesses need to contact the DIA legal unit or the Office of Insurance in Boston to determine obligations.
- Members of an LLC or partners of a LLP as well as sole proprietors and partners of unincorporated businesses are exempt from workers’ comp regulations.
Penalties for operating without insurance can range from civil fines to criminal penalties, so it is important for business owners to fully understand their obligations.
Where can I purchase workers’ comp insurance?
Business owners can find workers’ comp policies at any agency that handles business insurance policies. The policy should be purchased before hiring any employees. The cost of workers’ comp insurance depends on several factors, including the type of business.
How are workers’comp insurance rates determined?
The minimum and maximum compensation rate for workers’ compensation benefits are set by the Massachusetts DUA each year. The rates are available by October 1st.
For more information on Massachusetts’ UI and workers comp insurance, visit the Massachusetts Department of Labor and Workforce Development website at: http://www.mass.gov/lwd/.
For more information on Massachusetts’ UI and workers comp insurance, visit the Massachusetts Department of Labor and Workforce Development website at: http://www.mass.gov/lwd/.
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About the guest blogger: Carol Wilson is a versatile guest blogger who primarily writes about global business trends and finance. When she’s not writing for sites like www.businessinsurance.org, she enjoys reading about politics and fashion. If you have any questions or comments regarding the above post, or would simply like to contact Carol, she can be reached at: wilson.carol24@gmail.com.
