As economic conditions or fluctuating workloads force contractors to lay off a large portion of their workforce, their SUTA rates—the unemployment tax contributions paid for every employee on payroll—sky-rocket.

Along with the SUTA rate, each state also sets a taxable wage base. This is the maximum amount of wages per employee for which unemployment tax is applicable each year. In many states, this wage base has continued to increase.

So what does that all mean? Essentially, you may be paying out more in unemployment benefits than what you’re putting into your unemployment reserves account. And, the government will likely penalize you with substantially higher unemployment taxes in order to build up those reserves.

Take Control of Your SUTA Rate

Fortunately, you can get control over reducing your SUTA rate. Your SUTA rate is calculated on a three-year running average based on how much you’ve paid on unemployment benefits for each of the previous three years. To reduce your rate, you need to avoid employee layoffs and terminations.

That’s where Tradesmen International comes in. As your contingent staffing partner, we can supply the skilled craftsmen you need when your workload increases, and you can simply send them back as the work slows. This allows you to maintain a lean permanent workforce and supplement your core employees with ours as needed. Because our craftsmen are permanent Tradesmen employees, you don’t have to deal with layoffs or terminations, and there will be no negative impact on your taxes.

Learn more in this video: