NASHVILLE - Tennessee employers will pay unemployment insurance premiums at a lower rate for the first time in more than three years.
Unemployment insurance premium rates for state employers decreased because the balance of Tennessee's Unemployment Compensation Trust Fund on June 30 was more than $568 million, triggering new premium rates.
Employers with workers in Tennessee are responsible for reporting their workers' wages each quarter and paying unemployment insurance premiums on the taxable portion of those wages, the first $9,000 paid to each employee each year.
Unemployment premiums get deposited into Tennessee's Unemployment Insurance Trust Fund, which is used solely to pay unemployment benefits that provide income to workers who have lost their jobs through no fault of their own.
New employers in Tennessee are assigned a "new employer" premium rate until their account has been subject to premiums and chargeable with benefits for three full calendar years.
After that time, the employer becomes "experienc-rated," and his premium is determined by two factors: his reserve ratio and the balance of the Trust Fund.
The reserve ratio is the difference between cumulative premiums paid and benefits charged divided by his average annual taxable payroll for the three most recent calendar years.
An employer's premium rate is the rate that corresponds to his reserve ratio on the Premium Table then in effect.
The balance of the Trust Fund determines which of six Premium Tables is used to determine employers' premium rates. Table 6 is the lowest rate table; Table 1 the highest.
"Since Jan. 1, 2009, Premium Table 1 has been in effect. The two-table jump to Table 3 is of positive significance for employers, as they will pay unemployment insurance premiums at a lower rate for the remainder of 2012," said Labor & Workforce Development Commissioner Karla Davis.
The balance in Tennessee's Unemployment Compensation Trust Fund on each June 30 and Dec. 31 determines the Premium Table that takes effect for the immediately following six months of the year.
The Trust Fund balance on June 30 was more than $568 million, meaning experience-rated employers with a positive reserve -- those whose cumulative premiums paid are more than their cumulative benefit charges -- will immediately receive the positive impact of the move to Premium Table 3, with lower rates than the table previously in effect.
Rates for new employers within those industries with a negative reserve -- those whose cumulative premiums paid are less than cumulative benefit charges -- have also been recomputed. Here are the results:
* Construction, 8.6 percent (unchanged from the previous rate year);
* Manufacturing Sector 32, 6.1 percent (down from 6.6 percent);
* Manufacturing Sector 33, 8.6 percent (down from 9.1 percent); and
* Mining & Extraction, 6.1 percent (down from 6.6 percent);
Manufacturing Sector 32 includes wood, paper, petroleum, coal, chemical, plastic, rubber, and nonmetallic mineral products, as well as the printing industry and its related support services.
Manufacturing Sector 33 includes both primary and fabricated metal, machinery, computer and electronic products, electrical equipment, appliances, transportation equipment and furniture.