A hot topic in the PEO world that comes up a lot in meetings with businesses is the issue of SUTA Dumping.  LJ Roberts of the L. L. Roberts group provided a great article on this topic I’d like to share with you.

I was recently asked a questions by an Agent that encountered the same questions in the field. I wanted to share with you the same insight on…What is SUTA Dumping?

SUTA Dumping is a name commonly used to describe a practice used by some companies doing business in the United States to circumvent paying unemployment insurance taxes, as mandated by the Unemployment Tax Act of 1939.

In all 50 states, each employer is given a variable “experience” or “unemployment insurance” rate, depending on various factors, including worker retention. Some businesses retain the same employees for years, and have a low rate, while other industries (such as construction) tend to have high turnover and a corresponding higher rate. New businesses are given a ‘new employer rate’, which varies per state – California’s, for example, is 3.4% – and stay on that rate for a few years until they are considered “experience rated”.