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Frequently Asked Questions - Unemployment Insurance



Unemployment Questions - Employer Accounts

Who is liable for unemployment insurance premiums?
How does my business register as a "new" employer?
Who are employees?
What is a "reimbursing" employer (not-for-profit and government entities)?
If my business has employees working in several states, to which state(s) should I report the employees.
How is my premium rate determined?
How does my business file quarterly reports?
What is the definition of "wages"?
What are "taxable wages"?
When are my quarterly reports due?
What is magnetic media reporting?
How is my employer account charged for benefits paid to my former employees?
If I have questions about my employer account, who should I call?
What is a successor or mandatory successor?
How do I terminate/cancel my account?
How do my premiums paid to Tennessee affect my Federal Unemployment Tax (FUTA)?

Who is liable for unemployment insurance premiums?
As an employer, you become liable or "covered" under Tennessee Employment Security Law if you meet any one of the following conditions based on the type and nature of your business:

Conditions Exclusive to Regular Business Employers:

You have a total payroll of $1,500.00 or more in any calendar quarter of the current or preceding calendar year; or
You employ one or more persons during some part of a day in each of 20 weeks in the current or preceding calendar year. The weeks do not need to be consecutive, and both full-time and part-time workers are counted.

Conditions Exclusive to Agricultural Employers:

You pay $20,000 or more in wages in any calendar quarter; or
You employ 10 or more persons for some part of a day in each of 20 weeks in the current or preceding calendar year. The weeks do not need to be consecutive, and both full-time and part-time workers are counted.

Conditions exclusive to Domestic Employers :

You pay as much as $1,000 in cash wages in any calendar quarter in the current or preceding calendar year.

Conditions exclusive to Nonprofit Employers :

You employ four or more persons for some part of a day in each of 20 weeks in the current or preceding calendar year and you are exempt under Section 501(c)(3) of the Internal Revenue Code. The weeks do not need to be consecutive. Both full-time and part-time workers are counted, and officers of a nonprofit corporation are counted if such officers perform services for the nonprofit organization.

Conditions exclusive to Government Employers :

The employer is a state or local government unit or political subdivision.

General Conditions Under Which Any Employer Will Be Liable For Unemployment Insurance Premiums:

You are liable under the Federal Unemployment Tax Act (FUTA) and had at least one employee in Tennessee, regardless of the number of weeks employed; or
You are a "successor" to all or part of the business of an employer already covered.

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How does my business register as a "new" employer?
A "new" employer must complete a "Report to Determine Status – Application for Employer Number".
If you are liable for unemployment insurance premiums in Tennessee, you will be assigned an eight digit employer account number (i.e. 0000-000 0). Applications may be obtained by calling your local Employer Accounts Office or by calling toll free 1-800-344-8337 and pressing 1. If you are an out-of-state employer, call 1-615-741-2486. Make sure you specify whether you are a Regular Business, a Nonprofit Organization or a Government Employer.

These forms are also available in "Adobe Acrobat" format. Select the form you need:

Regular Business
Non-Profit Organization
Government Employer

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Who are employees?
Determining whether or not someone is an employee is a matter of law.
A few examples of employees are:

Corporate officers (including Sub-chapter S Corporations)
Individuals who, under the usual common-law rules applicable in determining the employer/employee relationship, have the status of an employee
Employees on whose earnings employers are required to pay Federal Unemployment Tax (FUTA)
Certain agricultural workers
Certain domestic workers
Individuals who are considered to be employees are described in Tennessee Code Annotated (Section 50-7-207(b)). Individuals who are not considered to be employees are described in Tennessee Code Annotated (Section 50-7-207(c))".

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What is a "reimbursing" employer (not-for-profit and government entities)?
Reimbursing employers are employers who are required to reimburse the department dollar for dollar for their proportionate share of benefits paid to a former employee. Governmental and nonprofit employers (employers qualifying under Section 501(c)(3) of Internal Revenue Code) have the option of electing to become reimbursing employers rather than premium paying employers.

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If my business has employees working in several states, to which state(s) should I report the employees?
Each employee’s situation may be different. Use the first applicable test of the 4 tests below when determining to which state a particular employee’s wages should be reported. If no test applies or you are not sure how to apply the test, contact our Employer Services unit at 615-741-2486 for assistance.

TEST (1) – The localization of services test – Wages are reported and premiums are paid to the state in which the service is performed. This test is applied only if the employee’s service is performed entirely within one state or the service is performed both within and outside of one state, but the service performed outside of that one state is incidental to the individual’s service within that one state. If this test is not applicable to the particular employee’s circumstance, apply TEST (2).
TEST (2) – The employee base of operations test – Wages are reported and premiums are paid to the state in which the employee has his base of operations and has performed some services. If this test is not applicable to the particular employee’s circumstance, apply TEST (3).
TEST (3) - The employer base of operations test – Wages are reported and premiums are paid to the state from which the service is directed or controlled if the employee performed some service in that state. If this test is not applicable to the particular employee’s circumstance, apply TEST (4)
TEST (4) – The place of residence test – Wages are reported and premiums are paid to the state in which the employee lives if some service is performed in that state.

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How is my premium rate determined?
Your employer premium rate is dependent upon whether you are a new employer or an experience-rated employer.

New employers in Tennessee are initially subject to a "new employer" rate until their account has been subject to premiums and chargeable with benefits for thirty-six consecutive months ending on the computation date (December 31, of each year). Beginning on the next July 1, they then become eligible for a premium rate based on their individual reserve experience.

Starting July 1, 2004, new employer premium rates are based on the combined reserve experience of the North American Industry Classification System (NAICS) sector of which the employer is a part. Under NAICS, Manufacturing is split into three separate sectors. Sector 31 includes food, beverage, and tobacco products, as well as textiles, leather, and apparel products. Sector 32 includes the manufacturing of wood, paper, petroleum, coal, chemical, plastic and rubber products, as well as the commercial printing industry. Sector 33 includes metal products, machinery, computer and electronic products, electrical equipment, appliances, transportation equipment, and furniture manufacturing. NAICS-based new employer rates are shown on the table below.

Rate Year Construction Mfg. Sect 31 Mfg. Sect 32 Mfg. Sect 33
Mining
July 08 – Dec 08 5.0% 5.5% 2.7% 6.0% 6.0%
Jan 09 – June 09 5.6% 6.1% 2.7% 6.6% 6.6%
July 09 – June 10 6.1% 5.6% 2.7% 7.1% 6.6%
July 10 – June 11
8.1%
5.6% 6.6% 9.1% 8.6%
July 11 – June 12 8.6% 2.7% 6.6% 9.1% 6.6%
July 12 – June 13 8.6% 2.7% 6.1% 8.6% 6.1%
July 13 – June 14 8.6% 2.7% 6.1% 8.6% 6.1%
July 14 – June 15 7.5% 2.7% 5.0% 6.5% 5.0%


The new employer premium rate for all other industries is 2.7%

An experience-rated employer is an employer who has been liable to pay unemployment insurance premiums for 36 consecutive months ending on December 31. An experience-rated employer’s premium rate is determined by two factors: the employer’s reserve ratio and the level of the Unemployment Insurance Trust Fund.

An employer’s reserve ratio is determined by taking the total premiums the employer has paid as of December 31 and subtracting from that all benefits charged against that employer as of December 31. The difference is then divided by the employer’s average payroll for the last three years. The resulting figure is the employer’s reserve ratio percent. An employer’s premium rate is the rate that corresponds with his reserve ratio on the effective Premium Table.

The level of the Trust Fund determines which of six (6) Premium Tables will be used to determine an employer’s premium rate.

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How does my business file quarterly reports?
"Premium Reports" (LB-0456) and "Wage Reports" (LB-0851) are mailed to employers each calendar quarter. If you do not receive a quarterly report, you are not relieved of your responsibility to submit reports and pay premiums due on time. You can obtain reports by calling the Employer Accounts Office in your area or by calling Employer Services at (615) 741-2486. Tennessee employers are required to use the "Premium Report" to report the amount of total gross wages and total taxable wages paid to all employees, as well as the number of employees working for the employer as of the 12th of the each month of the applicable quarter. Employers are also required to report each employee’s social security number, name and total gross wages on the "Wage Report".

Quarterly reports can also now be filed by Internet.  We call our online reporting system TNPAWS (TN Premium And Wage reporting System).  You'll need the access code that will be printed on your quarterly premium report to register a user account and file online.  The address is https://tdlwd.tn.gov/tnpaws/.  Please note that to access TNPAWS you do not type "www."

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What is the definition of "wages"?
All remuneration paid for personal services from whatever source is considered to be "wages" for unemployment insurance purposes. Examples of such remuneration, or compensation, are salaries, commissions, bonuses, drawing accounts, fees, certain gifts, deferred compensation, employee contributions to a cafeteria plan, employee-reported tips, allocated tips and vacation pay. Payments made to employees in a medium other than cash are also considered to be "wages", except for meals, lodging, and clothing when furnished for the employer’s convenience and on the employer’s premises.

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What are "taxable wages"?
Taxable Wages: For Tennessee unemployment insurance purposes, effective January 1, 2009, "taxable wages" are defined as the first $9,000 paid to each employee in a calendar year.

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When are my quarterly reports due?
Employers are required to report payroll and pay the total unemployment insurance premiums due for each quarter by the end of the month following the end of the quarter (i.e. Apr. 30, Jul. 31, Oct. 31, and Jan. 31).

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What is magnetic media reporting?
Magnetic media reporting is the filing of individual employee wage information on a CD, 3.5" diskette, or electronic filing by Internet (TNPAWS) or modem. Tennessee Employment Security Law requires employers or their agents reporting more than 250 employees to submit quarterly wage information on magnetic media.

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How is my employer account charged for benefits paid to my former employees?
If you are the only employer who paid wages to the benefit claimant for covered employment in his/her base period, you are the only employer with potential liability for benefits paid on the claim. However, if the claimant was paid wages for covered employment by more than one employer in his/her base period, the liability for benefit payments is prorated. Each employer is then responsible for a percentage of each payment, which is equal to the percentage of the total base period wages paid to the claimant by that employer.

Example:

Total base period wages = $10,000

Covered base period wages paid by Employer A = $5,000 (50%)

Covered base period wages paid by Employer B = $2,500 (25%)

Covered base period wages paid by Employer C = $2,500 (25%)

If the claimant was paid an unemployment check in the amount of $200, each employer’s charge is as follows:

Employer A = $100 (50%)
Employer B = $50 (25%)
Employer C = $50 (25%)

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If I have questions about my employer account, who should I call?
If you have questions about your employer account you can contact the Employer Accounts Office nearest you or the appropriate unit in the central office.

AREA EMPLOYER ACCOUNT OFFICES

Memphis   901-543-7543
Humboldt   731-784-7666
Nashville   615-741-2621
Columbia   931-380-2507
Chattanooga   423-634-6220
Cookeville   931-526-3531
Knoxville   865-594-6380
Johnson City   423-952-2261

CENTRAL OFFICE
Employer Services   615-741-2486
Employer Accounting   615-741-1619
Wage Records   615-741-3280
Report Audit   615-741-2538
Delinquency Control  615-741-5103
Toll-Free Number 1-800-344-8337 (Inside Tennessee)

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What is a successor or mandatory successor?
A successor is an employer who either acquires all of the organization, trade, business, or substantially all the assets of another employer, or acquires a distinct, severable, identifiable, and segregable portion of the business of another employer and continues that portion of the business.

A predecessor is an employer whose business or portion of the business was acquired by a successor.

If, at the time of the acquisition, there is any common ownership, management or control of the predecessor and successor employers, the successor employer will be considered a "mandatory" successor.  A "mandatory" successor acquires the experience rating factors and the liability for current or delinquent unpaid premiums, interest, penalties, and other remaining liabilities of the predecessor..

A successor shall also be considered a "mandatory" successor whenever the successor is a relative by blood or marriage of the predecessor and whenever the successor employer is or includes a relative to one or more of the owner(s) of the predecessor and both individuals have at least a 10 percent ownership interest in or participate in the management or control of their respective entities.

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How do I terminate/cancel my account?
Once you have established liability as an employer, you are subject to the unemployment insurance law for at least two calendar years, regardless of the number of employees, as long as you employ workers. However, you may request termination of coverage as of January 1 of any calendar year if you employed workers or paid wages to a lesser extent than required by law for the purpose of liability for the previous calendar year.

Such request must be submitted, in writing to our Employer Services Unit, before April 1 of the year the termination is to be effective.

How do my premiums paid to Tennessee affect my Federal Unemployment Tax (FUTA)?
In order to be eligible for a 5.4 percent offset credit against the 6.0 percent FUTA tax that you pay to the IRS, you must pay state unemployment insurance premiums for the previous year in full by January 31.

If the state premiums are not paid, you must pay the full 6.0 percent FUTA tax. However, this will not relieve you from state premiums.

Unemployment Questions - Benefit Charges

I am considering discharging one of my employees. What information will I need to provide to the unemployment office if this employee files a claim for benefits?

I have a probationary employee that is not working out. If I discharge him, will he be eligible for unemployment compensation?

I hired an individual to fill-in for someone. When I no longer have work for the temporary employee, will I be charged if he files for unemployment compensation?

I told this employee at the time of hire that this would be a temporary job. Will he still be eligible for benefits when the job is completed?

I never employed this individual, so how can I be charged?

I am considering discharging an employee. What type of information will the Department of Labor and Workforce Development require of me in order to keep this employee from drawing benefits from my reserve account?

A former employee has quit my employment. When someone voluntarily quits do I have any liability for benefit charges?

I am considering discharging one of my employees. What information will I need to provide to the unemployment office if this employee files a claim for benefits?
In the case of a discharge, the burden of proof lies on the employer to prove that a former employee was guilty of willful work-related misconduct. Below are some examples of issues our department looks for in the adjudication of a claim for benefits.

Absenteeism/Tardiness
Violation of Company Policy
Poor Work Performance
Drugs/Intoxicants
Refused Work Shift
Falsification of Application
Stealing

I have a probationary employee that is not working out. If I discharge him, will he be eligible for unemployment?
Tennessee law does not recognize probationary employment. If you discharge this individual, you will have to prove willful misconduct in order to protect your reserve account from charges.

I hired an individual to fill-in for someone. When I no longer have work for the temporary employee, will I be charged if he files for unemployment compensation?
Yes. Regardless of the length of time someone works for your business or the circumstances under which they are hired you will be liable for benefits paid.

I told this employee at the time of hire that this would be a temporary job. Will he still be eligible for benefits when the job is completed?
Yes. Even though it was made known at the time of hire that this was a temporary job, as soon as work is not available, he becomes eligible to apply for unemployment compensation and your reserve account becomes liable for charges if he is approved for benefits.

I never employed this individual, so how can I be charged?
If you acquire the experience rating and reserve account of another employer through a successorship, you become liable for the benefit charges that are charged against that predecessor employer's account. For more information about the transfer of reserves from one account to another, please visit the Employer Services portion of this web site.

I am considering discharging an employee. What type of information will the Department of Labor and Workforce Development require of me in order to keep this employee from drawing benefits from my reserve account?
Each separation is adjudicated based upon the individual circumstances surrounding a claimant's discharge. Some typical examples of the information we require is as follows:

A. Discharge for absenteeism/tardiness:
1. What were the dates of the last incident of the absenteeism or tardiness?
2. Did the claimant provide medical evidence of illlness during the absence/tardy?
3. Did the claimant notify anyone that he would be absent/tardy? If so, when were you notified?
4. Were there any prior warnings of absences/tardiness? If yes, please give dates, types of warnings, and who issued the warnings. Please provide a copy of these warnings and a copy of your absenteeism/tardiness policy.
5. Was the claimant aware of the absenteeism/tardiness policy? If so, how was the claimant made aware of this policy?
6. Describe in detail the final incident which prompted you to terminate this individual.

B. Discharge for poor work performance:

1. Describe the final incident that led to the discharge.
2. What were the standards expected of the claimant?
3. Did the claimant ever meet these standards?
4. Did the claimant make an attempt to conform to the standards?
5. Were there previous warnings for failure to meet the standards? If yes, provide copies of the warnings.

C. Discharge for violation of company policy:
1. Provide a copy of the company policy that was violated.
2. What did the claimant do that violated this policy.
3. How was the claimant made aware of this policy?
4. Were there any prior violations and warnings? If so, please provide a copy.
5. Were there any violations of this policy by other employees that did not result in discharge?
6. Was the claimant discharged at the time the infraction occurred? If not, please explain the time delay.

D. Discharge for insubordination:
1. Describe the insubordinate act.
2. When and where was the act committed?
3. Had the claimant previously shown insubordinate behavior? If yes, please describe these incidents.
4. Was the claimant warned that such behavior was not permitted? If yes, provide copies of these warnings.

A former employee has quit my employment. When someone voluntarily quits do I have any liability for benefit charges?
When someone voluntarily quits your business, an investigation is conducted to ascertain the reason the claimant quit. If it is determined that the claimant had a good work-related reason to quit, you are liable for benefit charges. Listed below are examples of the information we require in order to adjudicate voluntary quit issues:

A. Claimant voluntarily quit due to working conditions:
1. Were there any changes in the working conditions agreed upon at the time of hire? If so, please explain.
2. Were the changes permanent or temporary? And if temporary, for what period of time?
3. Did the changed working conditions affect other employees? If yes, please explain.
4. What affects did the changes have upon the claimant's production?
5. What action did management take toward resolving the problem?

B. Claimant voluntarily quit due to a medical condition:
1. Did the claimant provide a medical statement showing the necessity for leaving work?
2. Did this condition result in a physical disability?
3. Was the illness or injury work-related? If yes, is the claimant receiving any type of Worker's Compensation?
4. Did the claimant reapply for usual duties after being released by his doctor to return to work?
5. Did you offer the claimant work that he could perform if he had light duty restrictions?

NOTE: Pregnancy is considered an illness under Employment Security Law.
C. Claimant voluntarily quit in lieu of discharge:
1. Was the claimant given a quit or be discharged ultimatum?
NOTE: When someone voluntarily quits in lieu of being discharged, it is treated as if the claimant actually was discharged.
2. Give the details of the final incident that caused the discharge.
3. What specific rule, policy, or common labor practice did the claimant violate?
4. Was the claimant aware of these rules?
5. How was the claimant made aware of these rules?
6. Were there any prior incidents or warnings? Please provide a copy of the warnings or a detailed account of prior incidents.
7. Were any actions taken to correct the situation before the discharge?

Unemployment Insurance - Benefit Audit

Can someone work and draw unemployment benefits?
If I receive an audit card does that mean the employee is drawing unemployment?
Can I inquire as to whether someone is drawing unemployment benefits?
How can I report someone who is working and drawing unemployment benefits?
If my business is a party to a back pay award is that award reportable?

Can one work and collect benefits?
In some circumstances, yes. The most common situation would be an individual who is working, but earning less than the weekly benefit amount. In that instance they would normally draw an amount less than their normal weekly benefit amount. Information on the benefit cross match audit and instructions for completing the audit card.

If I receive an audit card does that mean the employee is drawing unemployment?
No. It means that they drew unemployment for the weeks that are listed on the card. They may or may not be currently drawing at the present. Click here for more information on the benefit cross match audit and instructions for completing the audit card.
Information on the benefit cross match audit and instructions for completing the audit card.

Can I inquire as to whether someone is drawing unemployment benefits?
An individual’s claim for unemployment benefits is considered confidential unless under appeal. Therefore, in most instances you will not be given information regarding someone drawing unemployment.
Guidelines on the release of claims information.

How can I report someone who is working and drawing unemployment benefits?

You may contact us by writing:
Benefit Payment Control Unit
P.O. Box 24150
Nashville, Tennessee 37202-4150

or by phone at:
615-741-2606 or
toll free in Tennessee at
1-800-344-8337.

You may also email the information to us. The information will be sent to an Unemployment Benefit Auditor who will review the information given as well as contacting the current employer. If it appears that an overpayment may exist, the claimant will be called in for a hearing regarding a possible overpayment.

If my business is a party to a back pay award is that award reportable?
Yes, In most instances, back pay constitutes wages and is reportable.
More on reporting back pay.