Florida Department of Revenue

Who Pays for It?

Florida employers pay for unemployment compensation through a tax managed by the Florida Department of Revenue. It is one of the employer's business costs. Workers do not pay unemployment tax and employers must not make payroll deductions for this purpose. Employer payments go into a fund from which money is paid to eligible, unemployed Floridians who file claims for unemployment compensation. After a qualifying period, employers with a stable employment history receive a lowered tax rate.

Who Is Liable?

A new business must report its initial employment in the month following the calendar quarter in which employment begins. The Department recommends that employers register to pay unemployment tax using our secure Internet site.

An employer is liable to pay if it meets any of the following conditions:

• Has a quarterly payroll of $1,500 or more in a calendar year.
• Has one or more employees for a day (or portion of a day) during any 20 weeks in a calendar year.
• Is an agricultural employer and has five or more workers for a day (or portion of a day) during any 20 weeks in a calendar year, or a $10,000 cash payroll in any calendar quarter.
• Is a domestic employer with a cash payroll of $1,000 or more in a calendar quarter.
• Is liable for federal unemployment tax.
• Purchases all or part of a liable business, or the combination of the employer’s payroll or employment and that of the business you purchased meets the liability criteria.
• Is a nonprofit organization as defined in section 3306(c)(8) of the Federal Unemployment Tax Act and section 501(c)(3) of the Internal Revenue Code and has four or more employees for a day (or portion of a day) during any 20 weeks in a calendar year.
• Is a state, county, city, or joint governmental unit.
• Is an Indian tribe or tribal unit.

Nonprofit organizations, government agencies, and Indian tribes are given the option of paying their unemployment insurance costs by the tax-paying method or the reimbursement method. The reimbursing employer must repay benefits paid to former employees on a dollar-for-dollar basis. Regardless of the method of payment, these employers must submit the Employer’s Quarterly Report (Form UCT-6) each quarter.

A liable employer must display the poster To Employees (Form UCT-83) where all employees can see it. Posters are available in Spanish (Form UCT-83SP).

Voluntary Coverage

An employer may apply for voluntary coverage for its employees. Voluntary coverage is for a minimum of one calendar year and subject to approval.

Who Are Employees?

These definitions will help you understand who is considered an employee and classify workers correctly. Misclassification of workers is not just a tax reporting issue; it also affects claims for unemployment benefits. If a person files a claim for unemployment benefits and the employer has not been including the person on the quarterly report, it can delay benefit payments.

• Employment - Any service done by an employee for the employer.
• Employee - A person who is subject to the will and control of the employer as to what must be done and how it is done.
• Casual Labor - Work that is not in the course of the employer's regular trade or business and which is occasional, incidental, or irregular. Do not confuse casual labor with temporary or part-time employment. A corporation cannot have casual labor, as covered in the Internal Revenue Code.
• Independent Contractor - A person not subject to the will and control of the employer. The employer does not control or direct the manner or method of job performance. The general public is aware that the person is an independent contractor. Read more about the difference between an employee or independent contractor.

  The difference between an employee or independent contractor:

  • An employee is subject to the will and control of the employer. The employer decides what work the employee will do and how the employee will do it. An officer of a corporation who performs services for the corporation is an employee, regardless of whether the officer receives a salary or other compensation.
  • An independent contractor is not subject to the will and control of the employer. The employer can decide what results are expected from the independent contractor, but cannot control the methods used to accomplish those results.
  • How the worker is treated, not a written contract or issuance of a 1099, determines whether the worker is an employee or an independent contractor. The Internal Revenue Service has additional information that can help you decide.
• Officers of a Corporation - Any officer of a corporation performing services for the corporation is an employee of the corporation during tenure of office, even when no compensation is received for these services. Compensation, other than dividends upon shares of stock and board of director fees, is presumed to be payment for services performed.
• Limited Liability Company (LLC) - A limited liability company is treated the same as it is classified for federal income tax purposes.
  • A person performing services for an LLC, treated as a corporation for federal income tax purposes, is an employee.
  • A person, other than a partner or exempt employee of a partnership, performing services for an LLC treated as a partnership for federal income tax purposes, is an employee.
  • A person, other than the sole proprietor or an exempt employee of a sole proprietorship, performing services for an LLC, treated as a sole proprietorship for federal income tax purposes, is an employee.
  A single member LLC may be treated as a corporation or a sole proprietorship for federal income tax purposes.
• S Corporation - Salaries paid to corporate officers are considered wages. All or part of the distribution of income paid to corporate officers who are active in the business and are performing services for the business can be considered wages.
• Employee Leasing Company - An employee leasing company is an employing unit that has a valid and active license under Chapter 468, Florida Statutes.
• Salesperson - Any individual paid solely by commission under your direction and control is an employee. The law exempts insurance agents, real estate agents, and barbers who are paid solely by commission. If they are paid by salary only or salary and commission, both are taxable and exemption does not apply. There is no federal unemployment tax exemption for barbers paid solely by commission.
• Agricultural Labor - Any service performed on a farm in the employ of the owner, tenant, or any other operator of a farm in connection with the production or harvesting of any agricultural or horticultural commodity or in connection with the maintenance or operation of farm equipment or grounds.

New Hire Reporting

Federal and state law requires employers to report employees who are newly hired and re-hired in Florida to the Florida New Hire Reporting Center. New hire reporting speeds up the processing of child support income withholding orders and the collection of support from parents who change jobs frequently. It also helps prevent overpayments of unemployment benefits to persons who have returned to the workforce.

Employment Not Covered

Some types of work are not covered and some wages paid for services are not subject to unemployment taxes. These exemptions include:

• Employees of a church, convention or association of churches; or of organizations operated for religious purposes that are operated, supervised, controlled, or principally supported by a church, convention or association of churches.
• Services performed by aliens in agricultural labor, who have entered the United States under section 1184(c) [formerly s. 214(c)] and s. 1101(a)(15)(H) [formerly s. 101(a)(15)(H)] of the Immigration and Nationality Act.
• Services performed by nonresident aliens, who are temporarily present in the United States as non-immigrants under subparagraph (F) or (J) of section 1101(a)(15) [formerly s. 101(a)(15)] of the Immigration and Nationality Act.
• Services for a school, college, or university by a student enrolled and attending classes there.
• Work on a fishing vessel under ten net tons.
• Services performed as a student nurse in a hospital or nurses' training school, a medical school intern in a hospital, or a hospital patient.
• Students working for credit in a school program such as CBE or DCT.
• Persons under age 18 delivering or distributing newspapers.
• Service for government by elected officials; members of the legislature and judiciary; those serving on a temporary basis in cases of fire, storm, etc.; or serving in an advisory capacity that ordinarily does not require more than eight hours per week.
• Services performed for a son, daughter, or spouse; or by children under the age of 21 for their father or mother. When the employer is a partnership, an exempt relationship must exist to all partners or there is no exemption. This exemption does not apply to corporations.
• Direct sellers who are contracted to sell or solicit consumer goods in homes or places other than a permanent retail establishment, and whose substantial payment is directly related to sales.
• Speech, occupational, and physical therapists who are not salaried and working under a written contract with a home health agency as defined in section 400.462, Florida Statutes.
• Service performed by an individual for payment for a private, for-profit delivery or messenger service, if certain conditions are met.
• Service performed by an inmate of a correctional institution (work release programs).

Wages

Wages are payments for services in employment, including commissions, bonuses, back pay awards, and the cash value of all payments in any medium other than cash. The cash value of meals and lodging will be exempt if it is included as a condition of employment for the convenience of the employer.

Sick and accident disability payments are wages when paid by an employer to an employee in the six calendar months after the calendar month the employee stopped working. Payments made under a workers' compensation law are not wages. Tips are covered wages if received while performing services that are considered employment and are included in a written statement furnished by the employee to the employer.

Reporting Wages

Wages must be reported each calendar quarter. Electronic filing of wage data saves time and paperwork for most employers. An Employer's Quarterly Report (Form UCT-6) is mailed each quarter to employers who do not file electronically.

The report must list total wages paid to covered workers, excess wages, taxable wages, and tax due and show each employee's name, social security number, and total wages paid during the period. If an employer is operating two business units and the secondary unit(s) has a cumulative total of at least ten employees, the employer must submit a Multiple Worksite Report (Form BLS-3020).

You can verify employees' social security numbers through the federal government's Social Security Number Verification Service.

Correcting Errors

If the employer filed quarterly reports but left out certain workers, it must send a Correction to Employer's Quarterly or Annual Domestic Report (Form UCT-8A) and pay any additional tax and interest due. The Department can require the employer to file amended returns as far back as 5 years.

If the employer did not file any employment reports, it must prepare the quarterly wage data and file electronically (or complete the UCT-6 forms) and pay tax and interest going back to the date of employment of the worker(s). The Department can require the employer to file returns as far back as 5 years.

Annual Filing Option

A domestic employer may select an annual filing option if all the employees exclusively perform services that are considered domestic service and the employer is eligible for an earned tax rate. An Application to Select Filing Period for Employers Who Employ ONLY Employees Who Perform Domestic Services (Form UCT-7A) must be submitted by December 1 to qualify for annual filing in the next calendar year.

Filing and Paying Taxes

You can report and pay unemployment tax using Revenue's secure Internet site. Or you may choose to:

• Develop your own software.
• Upload a file.
• Pay by telephone.

You must enroll in our e-Services program before you can file and pay your taxes electronically. Taxpayers who pay electronically can download a payment due date calendar and helpful hints for e-filing.

• You must file the wage data and pay the tax electronically if you are an employer who employed ten or more employees in any quarter during the preceding state fiscal year (July 1 - June 30).
• You must file the wage data electronically if you are a registered agent who prepared and reported for 100 or more employers in any quarter during the preceding state fiscal year (July 1 - June 30).

The penalty for failure to file a report by electronic means is $50 plus $1 for each employee. The penalty for failure to pay the tax electronically is $50 for each remittance. You can obtain a waiver from electronic filing if you have a valid business reason. There is no waiver from electronic payment.

Filers who do not meet conditions 1 or 2 above may file a paper UCT-6 report. We have detailed instructions to help you accurately complete your return. However, we encourage all taxpayers to file and pay electronically. Returns and payments are due on the 1st and late after the last day of the month following the end of each calendar quarter.

Installment Payment Option

Typically, the wage data and full payment of the quarterly tax are due by April 30, July 31, October 31, and January 31 (of the following year). Employers may make installment payments for the first three quarters (through 2014). To qualify, the wage data and installment payment must be submitted on time. An employer who chooses to pay in installments must pay an installment fee of $5.00 one time per calendar year, with the wage data for the quarter in which the election for installments is made.

Read more about this option and use our online calculator to compute your installment payments.

Income Deduction Orders

An employer may receive an income deduction order requiring it to deduct child support payments from an employee’s wages. If you are required to file and pay taxes electronically, you must also remit these payments electronically. Find out more.

How Much Do You Pay?

The initial tax rate for new employers is .0270 (2.7%). Beginning January 1, 2012, the first $8,000 in wages paid to each employee during a calendar year is taxable. Any amount over $8,000 for the year is excess wages and is not subject to tax. Excess wages can never be greater than gross wages. (Taxable wages prior to January 1, 2012 remain at $7,000.)

When a business is transferred, the successor may count wages paid to an employee by the predecessor when determining the taxable wage figure. The wages of employees who work for the same employer in another state and are transferred to Florida are included on the Quarterly Report for Out-of-State Wages (Form UCT-6NF) when calculating taxable wages reportable to Florida.

Due Dates

An Employer's Quarterly Report (Form UCT-6) is due the 1st day of the month following the end of each calendar quarter and is late if not postmarked by the last day of the month.

However, if the last day of the month is a Saturday, Sunday or legal holiday; the timely filing period is extended until the end of the next working day.

If you are making your payment by electronic funds transfer (EFT) or Internet, you must initiate the payment by 5:00 p.m. ET on the business day prior to the filing date(s) listed above for your payment to be considered timely.

Whether you are a paper or electronic filer, you can sign up to receive an e-mail every collection period, reminding you of the due date. 

Late filing penalty is charged at $25 per month or fraction of a month that a report is delinquent. Interest is charged at 1% per month on the unpaid tax from the original due date until the tax is paid.

Unemployment Tax Rates

When a new employer becomes liable for the tax, the initial rate is .0270 (2.7%) and will stay at that rate until the employer has reported for 10 quarters. The account will then be rated by dividing the total benefits charged to the account by the taxable payroll reported for the first 7 of the last 9 quarters immediately preceding the quarter for which the rate is effective.

The only exception is for employers liable by succession who choose to accept the tax rate of the previous employer, along with the responsibility of paying any outstanding amounts due. At that time, a tax rate will be calculated using the employment record and the rating factors, which are built into the Unemployment Compensation Law.

The maximum tax rate allowed by law is .0540 (5.4 %), except for employers participating in the Short Time Compensation Program. Rate notices are mailed to all contributing employers each year. You may appeal your tax rate within 20 days from the date of notification (date printed on Form UCT-20, Unemployment Compensation Tax Rate Notice).

The minimum and maximum tax rates effective January 1, 2012 are as follows (based on annual salary up to $8,000 per employee):

• Minimum rate: 0.0151 or $120.80 per employee
• Maximum rate: 0.0540 or $432 per employee

How Rates Are Calculated

The unemployment compensation system is a federal-state partnership. Each state determines benefit qualification levels and amounts, benefit duration, disqualification and tax structure, within federal limits.

For example, federal guidelines require each state to:

• Base its tax structure on benefit experience.
• Have a new employer tax rate of at least 1.0%.
• Have a maximum tax rate of at least 5.4%.
• Have a taxable wage base of at least $7,000.

Each state sets tax rates, benefit levels, and trust fund balances based on that state's needs. Each state has its own benefit trust fund account within the U.S. Treasury.  In Florida, the account is funded by a tax paid by employers.

Florida assigns new employers an initial tax rate of 2.7%. This rate stays in effect for the first 10 quarters. At the end of this period, an employer has enough history to qualify for an experienced-based tax rate. The formula for calculating the rate combines three major factors:

1. The individual benefit ratio makes up the greatest portion of the employer's final tax rate. This ratio is calculated by dividing the previous 3 years of benefit charges for former employees by the taxable payroll for that same 3-year period. So the benefits charged and the size of the payroll have a direct effect on the employer's tax rate.
   • Beginning with the 2012 annual rates, the benefit charges are reduced to 90% of the total for the period July 1, 2008 through March 31, 2011.
   • Beginning with the 2012 annual rates, the timely reported taxable payroll uses $8,500 for the period January 1, 2010 through June 30, 2011.
2. The variable adjustment factor is made up of three ratios that will spread the costs among employers that have had benefit charges in the three previous years.
   • The last 3 years of non-charged benefits (those not attributable to any employer).
   • Excess payments (the portion of benefit charges which exceed the maximum rate of 5.4%).
   • The fund size factor, which requires the state to keep a trust fund balance of at least 4% of the previous fiscal year's taxable payroll. If the trust fund balance is below this amount, a positive adjustment factor is computed annually until the fund balance (on September 30) equals or exceeds 4% of the previous year’s taxable payroll.
3. The final adjustment factor spreads costs not included in the second factor to all employers whose rates are not at the initial or maximum levels. This factor is also distributed among employers who had no benefit charges in the preceding three years. This factor determines what the minimum rate for that tax year will be.

Ideally, each employer would pay the exact amount of unemployment compensation benefits that are chargeable to his or her account. This is not possible because the maximum contribution rate is 5.4%, and sometimes benefit payments are not charged to a specific employer. These added costs are divided among all rated employers through the variable adjustment factor and the final adjustment factor. Each employer's contribution rate is his or her benefit cost, plus a share of unassigned costs. This keeps the unemployment compensation program solvent.

Protecting Your Tax Rate

Unemployment Insurance (UI) helps cushion the impact of economic downturns on communities, states and the nation by providing temporary income for qualified, unemployed workers. However, improper payment of benefits is a serious problem that has a financial impact on employers.

Employers can help reduce higher taxes by providing complete and accurate information needed to determine a claimant's eligibility for benefits.

Here's how you can prevent improper payments and protect your tax rate:

• Report all new and rehired employees to the Florida New Hire Reporting Center by the due date, as required by federal law. Timely reporting helps prevent improper payment of benefits after an individual has returned to work.
• Respond promptly to any Request for Verification of Weekly Earnings. Verifying earnings ensures that the correct amount of UI benefits is paid for weeks of partial unemployment.
• Provide complete and accurate employee separation information. The employer's timely response to the Notice of Claim Filed (Form UCB-412) is used, in part, to determine the claimant's eligibility for UI benefits.

Employers who do not comply with state and federal UI requirements for providing employee information risk higher costs through increased taxes, fines or penalties.

For questions about benefit eligibility and payment, contact the Unemployment Compensation Program office at 800-204-2418.

Termination of Coverage

An employer will be eligible for termination if it has not met any liability criteria for an entire calendar year or if the business closes (which is different from only selling assets, selling stock, or merging into another business to be the continuing entity). If the employer qualifies because it has not paid wages for a year, the employer must apply for termination of coverage by April 30 of the following year. Contact the Department in writing to close the account of a closed business after the final wages have been paid. Once liability is terminated, the employer must reestablish liability in the same manner as any new employing unit.

Claims for Benefits

Unemployed workers who are covered under the Florida Unemployment Compensation Law will receive benefits if they are eligible and qualified. Prompt and accurate information from employers is vital to the establishment of a claimant's right to benefits. Employers must furnish information on time when requested. This helps protect the employer’s tax rate. Information must be complete, accurate, and factual. Read the Employer Guide to Unemployment Compensation Benefits (Form UCT-800001) for more details.

For more information about the claims process, including qualification requirements and disqualification reasons, contact the Department of Economic Opportunity.

Protest and Appeal

Unemployment compensation law provides a fair and impartial hearing to resolve disputes. The Department of Revenue will make every attempt to resolve informal protests. If not resolved, the employer can appeal to the Department of Economic Opportunity. In most instances, appeals must be filed within 20 days from the date printed on the notice, must be in writing, and must clearly state the reasons for appealing. Read the appeal rights on the notice to ensure that you file your appeal within the specified time frame. For more information, contact the Department of Economic Opportunity, Division of Workforce Services.

Change of Address or Business Status

If you move, sell, or close your business; or change your business structure, you must notify the Department. You can submit the information online or download an Employer Account Change Form (Form UCS-3).

Reference Material

• Revenue's Tax Law Library contains statutes and rules relating to unemployment tax: Chapter 443, Florida Statutes; and Rules 60BB-2 and 60BB-3, Florida Administrative Code.

• Get unemployment tax forms and publications (except Form BLS-3020).

• To get Form BLS-3020, contact the Department of Economic Opportunity, Labor Market Statistics at 800-672-4664.

• For claims and benefits information, contact the Department of Economic Opportunity at 850-617-0410.

• For appeals information, contact the Department of Economic Opportunity at 850-921-3511.

More Resources

• Download Revenue's Unemployment Compensation Law brochure.

• The Employer Guide to Unemployment Tax explains taxing procedures and the Employer Guide to Unemployment Compensation Benefits explains benefit and claim provisions.

• Florida prohibits tactics used by some employers to reduce unemployment tax liabilities through schemes known as "State Unemployment Tax Act (SUTA) Dumping." Revenue issued a Tax Information Publication explaining Florida's law against SUTA dumping.

• Learn more with a tax tutorial - Unemployment Tax Tutorial for Employers

• Federal and State law requires employers to report newly hired and re-hired employees in Florida to the Florida New Hire Reporting Center.

• If you are selected for an audit, read “What to Expect from a Florida Unemployment Tax Audit.”

• Get answers to frequently asked questions.