1. (1) There are two types of contribution rates, "new" employer rates and "experience" rates. The following components are used in calculating new and experience rates.

   1. (a) Reserve Factor.

      The "Reserve Factor" adjustment to the benefit ratio, which may be an increase, decrease, or 1.0, is used to maintain an adequate balance in the benefit reserve fund.

   2. (b) Social Cost.

      The "Social Cost" is applied to all employers to recover benefit costs that cannot be attributed to a specific employer.

2. (2) The new employer rate is assigned to employers with less than one fiscal year of reporting experience.

   1. (a) New employers are assigned a rate based on the two-year average benefit ratio, which is calculated by dividing benefit costs of all employers in the respective industry by the taxable wages of those employers.
   2. (b) The overall new employer rate is the benefit ratio of the respective industry multiplied by the Reserve Factor plus the Social Cost.
   3. (c) A new out-of-state contractor will be assigned the maximum tax rate allowable under state law unless the contractor purchased an existing business.

3. (3) The experience rate is assigned to an employer with one or more fiscal years of reporting experience.

   1. (a) Employers subject to the experience rate are assigned a rate based on the employer's benefit ratio, which is calculated annually for each employer by dividing the total of all chargeable benefits paid to the employer's former employees in the last four fiscal years by the employer's taxable wages for the same time period.
   2. (b) The overall experience rate is the employer's benefit ratio multiplied by the Reserve Factor plus the Social Cost.
4. (4) Contribution rates may be affected by delinquent contributions, delinquent reports, and acquiring a business of another employer, as these terms are used in Sections 35A-4-301, 35A-4-303, 35A-4-304, 35A-4-306, and 35A-4-307.
5. (5) The objective of the benefit ratio method of taxation is to use an experience rating system that provides for equitable allocation of costs, increases incentives for employer participation, and makes building and maintaining a solvent reserve fund the responsibility of those employers who use the system.

KEY: unemployment compensation, rates

Date of Last Change: April 21, 2022

Notice of Continuation: June 9, 2022

Authorizing, and Implemented or Interpreted Law: 35A-4-303