Glossary of terms and industry explanations
Definition of terms
Array calculation factor rate: Also known as the experience-based tax rate (or experience tax rate), this is the rate an employer earns based on the amount it is charged for the unemployment benefits its employees collect. For qualified employers (see definition below), the experience tax rate ranges from 0 percent to 5.4 percent.Base year: The first four of the last five completed calendar quarters before the benefit year of the claim. For example, most claims filed in February 2004 use October 2002 through September 2003 as the base year. The wages earned during this time determine the claimant’s weekly and maximum benefit amount.
Base-year employer: The employer(s) that a person worked for during the base year of the claim.
Benefit ratio: The calculation that determines which rate class each employer is assigned to each year. It is computed by dividing the total cost of unemployment benefits charged to an employer in the past four fiscal years (July 1 through June 30) by its total taxable payroll for that same period.
Benefit year: This is the 52-week period that begins when a person applies for benefits (e.g., opens a “benefit claim”). A person may have one or more episodes of unemployment during a single benefit year. When the year is up, the claim expires and the worker must re-apply to qualify for additional benefits.
Business: A company that has employees and is required to register with and report to the Employment Security Department, unless otherwise noted.
Business birth: When a company starts doing business.
Business death: When a company stops doing business.
Business size: The average number of workers employed per month over a one-year period. The average can be less than one. For example, when a business employs only one worker for six months, the monthly average over the entire year would be 0.5.
Community Options Program Entry System (COPES): A program intended to provide in-home care to people who might otherwise have to be placed in a nursing home. The program is funded through the Washington State Department of Social and Health Services (DSHS), but the individuals receiving care are considered the “employer” of the care-giver.
Experience-based tax rate: See array calculation factor rate above.
Expired claims: Unemployment claims last 52 weeks. When that time is up, the claim expires and the worker must re-apply to qualify for benefits.
Graduated-social-cost factor rate: Also known as the social tax rate, this is the rate that covers costs within the unemployment-insurance system that cannot be charged to specific employers. It is the difference between the amount of experience-rated taxes and benefits paid for the past fiscal year (July 1 through June 30). There are 12 social-tax rates, which vary from year to year and by rate class.
Household employers: A person or company that hires a housekeeper, cook, gardener, nanny, maid or a private care-giver to take care of the elderly or ill. This group includes people who hire care-givers through the Community Options Program Entry System program (see definition above).
Inactive employers: Employers that close their accounts with the Employment Security Department because they merge or sell the business or no longer have employees.
Ineffective charges: Benefit charges that cannot be assigned to specific employers. It is computed by taking the amount of unemployment taxes (both experience-based and social) paid for a calendar year by employers in a specific rate class subtracted from the amount of benefits charged to all employers in that rate class during the previous fiscal year. Ineffective charges are spread across all other employers through the “social tax” to keep the trust fund stable.
Liberal construction: A broad interpretation of the law that considers other factors, such as intent and case history, in addition to the words used within a specific law.
Non-qualified employers: Businesses that did not have employees over a specific time period, have not submitted all required reports, and/or have not paid all taxes, penalty and interest charges as of September 30.
Non-recoverable overpayment: Overpaid unemployment benefits that the Employment Security Department cannot recoup because state law does not hold the worker nor the employer liable for the error(s) that caused the overpayment.
Number of employees: See business size above.
Primary base employer: The employer on each claim that paid the worker the greatest amount of wages in the base year (see definition above).
Qualified employer: A business with employees over a specific time period that has submitted all required reports and paid all taxes, penalty and interest charges as of September 30.
Reimbursable employers: Businesses that pay dollar for dollar on all unemployment benefits paid to former employees. Eligible businesses include state, county and local governments; public schools; some tribal entities; and non-profit organizations with 501(c)(3) status.
Repeat episodes of unemployment: When a person collects unemployment benefits over multiple years. For the purpose of studies conducted by Employment Security in 2006, only people with three or more claims over the four-and-a-half-year study period were defined as having repeat episodes of unemployment.
Social tax rate: See graduated-social-cost factor rate above.
Shared Work: A program that allows employers to temporarily reduce the number of hours employees work to avoid layoffs. The employees collect a corresponding percentage of unemployment benefits.
Socialized costs: Costs that other employers must pay when an employer does not pay for the unemployment benefits paid to its employees. These costs are covered through the unemployment-insurance social tax paid by employers.
Solvency surcharge: This charge is in effect only when the amount in the unemployment trust fund falls below the amount needed to pay benefits for a certain period of time. The solvency surcharge cannot exceed 0.2 percent, and all employers pay the same rate, regardless of rate class. Since being introduced in 2005, employers have not been charged the solvency surcharge.
Stand-by: A provision that allows employers to maintain their work force through temporary layoffs. An employer can place a worker on stand-by, and that worker can collect unemployment benefits if the layoff is temporary and there is a specific date that the person will be called back to work. For example, a manufacturing company may close down for two weeks to clean its equipment and place its workers on stand-by so that they can collect unemployment benefits for the two weeks that they cannot work. People can be placed on stand-by for a maximum of eight weeks in a benefit year.
State Unemployment Tax Act (SUTA) dumping: When an employer buys, merges or restructures a business to pay less unemployment tax than it should. State and federal legislation was passed in recent years to close loopholes that allowed companies to “SUTA dump.”
Uncollectible corporate debts: Unemployment taxes that a corporation owes, but has no resources to pay, and for which the Employment Security Department has exhausted all collection options.
Unemployment rate: The total number of people in the state who are unemployed but seeking work. This is not limited only to the number of people who collect unemployment benefits.
Industry explanations
Construction of buildings: Includes companies that build commercial properties and homes.Crop production: Includes agricultural growers.
Food manufacturing: Includes companies that process food, such as fish and fruit canneries.
Heavy- and civil-engineering construction: Includes companies that build highways, dams and other major infrastructure projects.
Specialty-trade contractors: This industry includes foundation contractors, electricians, roofing companies, etc.
Nonresidential building construction: Includes companies that build commercial properties, not homes.