Unemployment Insurance: I Had No Idea!
I read an article on the New York Times website about how much employers must pay in unemployment insurance. It’s really quite a bit more than I would have expected. I know my company keeps people on, sometimes for as long as 2 years, as contractors before hiring them on full-time. I suspect this is partially to avoid these types of problems where you hire√ā¬†someone√ā¬†and need to fire them in 45 days and don’t want to be subject to the unemployment penalties.
If small businesses have to be worried about a half percent√ā¬†increase√ā¬†in what they pay in unemployment insurance when they need to fire√ā¬†someone√ā¬†for incompetence it’s no wonder they are hesitant to hire new people.
From the article:
Here√Ę‚ā¨‚ĄĘs how it works in Illinois. The important point for business owners to know is that when the state pays out claims to a company√Ę‚ā¨‚ĄĘs former employees, that company√Ę‚ā¨‚ĄĘs unemployment tax rate goes up. For each business, the state calculates how many dollars have been paid in compensation over the previous three years and adds on about 48 percent through various calculations. The result is that in Illinois, you end up paying for incremental compensation claims at a rate of $1.48 for every dollar that a former employee collects.