Page 290 - Essentials of Payroll: Management and Accounting

Unemployment Insurance
make the decision to contribute additional funds within 30 days of the
date when a state mails its notice of contribution rates to the company.
The decision to pay additional funds to the state should be based on a
cost-benefit analysis of the amount of funding required to reduce the

contribution rate versus the reduced amount of required contributions
that will be gained in the next calendar year by doing so.

State Disability Tax
A few states maintain disability insurance funds, from which payments
are made to employees who are unable to work due to illness or injury.

This tax is sometimes a joint payment by both employees and employers;
in other cases it is borne solely by employees. Exhibit 10.6 shows the
range of employer tax rates, employee withholding rates, taxable wage
limits, and employee coverages for each state where a disability fund
is used.

EXHIBIT 10.6

Specifics of State Disability Funds

Employee Taxable
Employer Withholding Wage
State Tax Rate Rate Limit Coverage
California (1) 0.9% $46,327 Any company with 1+
employees in the current
or immediately preceding
year and that paid $100+
in wages in any quarter
Hawaii (2) (3) $33,316 Any company with 1+
employees in current
year
New Jersey 0.1%–0.75% 0.5% $22,100 Any company paying at
least $1,000 wages in
the current or
immediately preceding
year

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