Unemployment can feel like another universe sometimes. Part of the mystique is simply due to vocabulary. Here are some words and phrases that are used regularly in Unemployment that can help you understand things a little better.
Reimbursing or Contributing Employer
These words refer to your method of payment to the state agency for claims. A reimbursing employer pays the state of Ohio each month for every dollar that is paid out in unemployment to former employees. Reimbursing employers file quarterly payroll reports, but they pay no UI taxes on wages. They pay dollar for dollar on claims. Reimbursing employers are public companies (schools) or tax-exempt agencies (501c3) such as nursing homes or county run Developmental Disability facilities.
Contributory, or Contributing, employers are private businesses that pay taxes on employee wages each quarter. The rates charged to these employers are based on their previous claims experience. They do not pay dollar for dollar on claims, but pay a flat rate based on their payroll and prior claim experience.
Separating or Base Period Employer
If an employee opens up an unemployment claim, and you were the last place they worked, you are the Separating Employer. The claim will be allowed or denied based on the reason for separation from you.
If they left you and worked somewhere else, then opened a claim after separation from the new employment, you are a base period employer. In this case, the reason for separation from you has no effect on the claim being allowed or denied. But you do have a possible opportunity to request mutualization of the potential charges.
Mutualization of Charges
Mutualization is a word used by the ODJFS to describe removing charges from the experience of contributory employers when they are a base period employer and the reason for separation was for cause. Contributing employers pay taxes on employee wages. This tax includes a variable rate that all employers pay called a Mutualization Tax. This amount goes into a separate pool and is used to pay for base period claims.
An example: Jill works at ABC Company and quits to accept a job at XYZ Company. She works at XYZ for six months and gets laid off. Because her separation from XYZ was a layoff (an allowable claim) she is eligible to collect unemployment. However, we at ABC should not have to pay her because she quit our employment. We can request Mutualization of our portion of her claim. The claimant is not affected. She will still receive all of the money she is monetarily eligible for. But ABC’s portion will be paid from the mutualized account and will not count against our experience when next year’s tax rates are calculated.
Reimbursing employers who do not pay taxes do not have the ability to request Mutualization of charges or to fight claims when they are in the base period and not the separating employer. This is due to the fact that the mutualization of charges is accounted for from the taxes paid. Since reimbursing employers pay no UI taxes, they do not have the right to fight these claims.
Be sure to check back for part two of our UI Vocab lesson. We’ll help define things like Base Periods and Dependants and explain how Weekly Benefit Amounts are calculated.