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In the period of the world economic crisis every employer should think about one’s future in case of losing a job. Obviously, every state in the United States of America has its own code that explains how to act when a person becomes unemployed. This paper is devoted to the outline of the Wisconsin unemployment law and how the amount of fired employees may influence the amount of taxes paid by the company. The paper will be divided into two parts: the first part will be devoted to the issue of the unemployment law in Wisconsin, whereas the second part will deal with the practical issue, which means that the second part will contain the calculation of the unemployment tax for the company.
Wisconsin Unemployment Law
As it has been already mentioned above, every state in the country has its own unemployment code which regulates not only the prescription of what an employer should do in case of firing someone, but also what an employee should do in case of being fired. Unemployment insurance in the U.S. covers almost all employees. During the nearly 70-year period of the federal system of unemployment insurance has undergone changes due to the terms of appointment and payment of unemployment benefits, tax collection base, and it has been extended to workers in small enterprises, agricultural workers, employees of non-profit institutions, hired domestic workers, and even some categories of migrating farm workers.
Benefits under the state program of unemployment compensation are available on the following conditions:
- The applicant must be unemployed;
- Before the loss of work, he or she had to work in the sector covered by the program of unemployment insurance;
- The applicant must meet all the program requirements.
U.S. Bureau of Labor Statistics defines unemployed as
"persons 16 years and over who, during the week of the survey had no job, had taken specific steps to obtain work during the four weeks prior to the interview (such as an appeal directly to the employer or registration in a public or private employment agency ) and ready to get to work. Persons awaiting an invitation to his old job after the mass layoffs or supposed to start working at the new location after 30 days are also classified as unemployed, regardless of whether they are engaged in an active job search or no." (“How the government measures unemployment”, 2009)
A person who has not previously been an employee, is officially considered an unemployed if he or she tries to find a job. On the other hand, a person who has worked in the past, but is not working at the moment and gave up searching for work, is not considered an unemployed and therefore not entitled to benefits under the unemployment compensation program. Rate of contributions to the unemployment insurance funds varies by state in a wide range and depends on the rate of unemployment in the state. Within the state, the unemployment rate is also different, and for enterprises it largely depends on the stability of employment in such companies. Enterprises that reported layoffs or a sharp rise in the past have to contribute a higher percentage to the unemployment insurance fund. Each state sets the maximum and minimum rate of contributions to the unemployment insurance fund.
An American who has lost his or her job can apply for benefits immediately after a dismissal. An unemployed must apply personally in the office issuing unemployment benefits. If a person meets all the requirements, the benefits accrued to him or her, but no earlier than one week after the dismissal. The first check usually comes in two to three weeks after treatment in the office.
To receive unemployment benefits, one needs to work for a certain period of time (usually not less than six months) and to provide information about the reason for dismissal. An unemployed must apply personally in the office issuing unemployment benefits, which are established in each state, with details about the profession, the last place of work, time worked, wages and causes of the job loss.
If an employee is fired due to his own fault, for example, for violation of labor discipline, or he/she leaves voluntarily without good cause, the right to unemployment benefit is lost.
Critics of the current system of unemployment insurance have focused on the need to link benefits with measures aimed at finding new sources of income, retraining those who have no hope of returning to the same job or even work in their specialty. This approach focuses not only on economic support during job loss, but also the transformation of unemployment benefits from the "safety net" in the "bridge", "the device to work”. Moreover, for receiving benefits one must demonstrate willingness not only to finding a job, but also to the re-training for new skills.
Among these new approaches it should be noted, in particular, the introduction of a phased extension of benefits depending on their participation in the programs of retraining; benefits in higher amounts in the first weeks of their subsequent reduction to enhance the process of re-training and job placement. Another approach is to allow the insured unemployed to get a lump sum, which could be a source of starting one’s own dale. At the same time such a program should provide appropriate training and advice for each participant.
Thus, government policies to boost jobs and improve the system of unemployment insurance are changing. More and more attention is paid to improving the competitiveness of job seekers in the labor market. This is reflected in the development of measures to facilitate their access to vocational training, expand the availability of credit for education, and in special programs of information support the unemployed on their rights and opportunities to receive support to adapt to the changing conditions of employment.
The company X has 30% of annual terminations. Before calculating it is necessary to mention that there are two kinds of unemployment tax that an employer should pay: FUTA (Federal unemployment tax act) and SUTA (state unemployment tax act). The paper is devoted to the issue of Wisconsin state, thus, these calculation will show only the amount of taxes an employer should pay according to the SUTA. To calculate SUTA tax, one should know the minimum and maximum tax rate as well as the wage of every employee. In such a case, an employer will know the amount of taxes he or she should pay a person monthly. In a case of firing, this amount of taxes will determine the amount of taxes paid. When the company has 30% of annual termination, the employer should pay 30% more annually. Thus, the formula will be the following:
Tax amount = (the average tax rate (which is 3.6 % in Wisconsin) * the wage of every person (maximum of $14000 per year)) + 30%.
Every employer should follow the unemployment law of the state where a company is situated or registered. In the United States of America every state has its own unemployment law, which contains information both for employers and employees. The code of Wisconsin contains information about those who can be considered unemployed, what taxes an employer should pay and how an employee is protected by law. According to US Bureau of Labor Statistics defines an unemployed as:
"persons 16 years and over who, during the week of the survey had no job, had taken specific steps to obtain work during the four weeks prior to the interview (such as an appeal directly to the employer or registration in a public or private employment agency ) and ready to get to work." (“How the government measures unemployment”, 2009)
Moreover, the code defines those who cannot get insurance benefits, as well as the term during which an employee may receive such benefits. The paper also contains the outline of specialists’ suggestions about the future of insurance policy, however, only some of them may be effective in future. The suggestion to allow the insured unemployed to get a lump sum, which could be a source of starting to open one’s own dale, may be the most effective in the future. At the same time, such a program should provide appropriate training and advice to each participant. Here, one sees many opportunities to change the unemployment situation in a state or even in the country; moreover, such strategy excludes the opportunity of fraud in the sphere of unemployment insurance.
The second part of the paper contained the calculation of tax paid by the employer whose company has 30% of annual termination. The second part of the paper contains the formula which can help an employer calculate tax amount. The formula is based on the calculation of the state unemployment tax act, which determines the amount of taxes paid for every employee who receives the salary of more than fourteen thousand dollars per year.
- n.a. 2013 Circular E. Employer’s Tax Guide, retrieved from http://www.irs.gov/pub/irs-pdf/p15.pdf
- n.a. 2013 FICA FUTA SUTA rates retrieved from http://www.wsdot.wa.gov/NR/rdonlyres/6C563967-70A1-4FB6-8A71-B7027B536D43/0/FicaFutaSutaRates.pdf
- n.a 2009 How the government measures unemployment retrieved from http://www.bls.gov/cps/cps_htgm.htm#unemployed
- n.a. 2013 State unemployment tax rates, retrieved from http://www.taxpolicycenter.org/taxfacts/Content/PDF/state_unemp_rate.pdf
- n.a. 2013 Unemployment insurance and reserves retrieved from http://docs.legis.wisconsin.gov/statutes/statutes/108.pdf#page=55
- n.a. 2013 Unemployment insurance tax rate, retrieved from http://dwd.wisconsin.gov/ui/employers/taxrates.html