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How is UI calculated for employers?
The UI program is financed by employers who pay unemployment taxes on up to $7,000 in wages paid to each worker. The tax paid by an employer creates the reserve account for paying unemployment claims to former employees of the company.
Employees may qualify for up to 26 weeks of unemployment benefits. The actual tax rate varies for each employer, depending in part on the amount of UI benefits paid to former employees. Thus, the UI tax works much like any other insurance premium.
An employer may earn a lower tax rate when fewer claims are made on the employer's account by former employees. Also, if the total amount of claims (duration of claim X weekly amount) is reduced, the employer will have a greater balance in their reserve account and that will also contribute to lowering the tax rate.
Currently, California Unemployment Insurance is using Schedule F+ and the tax rates vary from the lowest rate of 1.5 to the highest 6.2 percent on the first $7,000 of each employee?