If employment is covered under the Pennsylvania Unemployment Compensation Law (Law), employers are responsible for UC coverage of their employees. However, political subdivisions and certain nonprofit employers have a choice of two methods of financing this coverage. The two methods are:
- Contributory Method - employers pay contributions (tax) based on a contribution rate and
taxable wage base paid to each employee each calendar year.
- Reimbursable Method - employers may elect, if qualified, to reimburse the UC Fund for the amount of UC benefits charged to their account and billed dollar-for-dollar on either a quarterly or monthly basis.
Nonprofit employers exempt under section 501(c)(3) of the Internal Revenue Code who elect the reimbursable method are required to reimburse the Fund for all regular benefits paid which are attributable to service with the employer, and for one-half of the extended benefits paid.
Political subdivisions of the Commonwealth who elect the reimbursable method are required to reimburse the Fund for all regular benefits attributable to their employ, and the full amount of extended benefits.
Collecting and Remitting Employee Withholding
When applicable, all employers are required to withhold employee contributions at the time wages are paid, regardless of the method used to finance UC liability. The employee withholding tax rate is determined annually and based on the trigger mechanism in the PA UC Law under Sections 301.7 and 301.8 (43 P.S. §782.7 and §782.8). Whether the employer is a contributory or a reimbursable employer, payment in full of all withheld employee contributions must be remitted to the Office of UC Tax Services (UCTS) with the employer's quarterly tax and wage information.
Employee contributions are based on an individual's total (gross) earnings. The
taxable wage base ceiling does not apply to employee contributions. Employee contributions are not considered in determining an employer's experience rate, nor are they considered "contributions" for federal certification purposes under the Federal Unemployment Tax Act (FUTA).
Terminating Reimbursable Status
An employer may terminate reimbursable coverage after a period of not less than two taxable years and convert their status to that of a contributory employer at the end of any calendar year. The employer must submit their request in writing and it must be received thirty (30) days prior to the end of the calendar year (by December 1).
Under Section 1107(b) and 1202.5(b) of the PA UC Law (43 P.S. §907 and §912.5) employers who have elected the reimbursable method of financing UC coverage may be converted to the contributory method for failure to file all required quarterly reports, remit amounts due and/or provide collateral bond or deposit (if applicable). The conversion will be effective for two years, beginning the next calendar year through the following calendar year.
Solvency Fee Notice Alert
Employers using the reimbursable financing method have a yearly option to elect to request relief from charges for individuals who have applied for unemployment benefits. To elect to request relief from charges, the employer must pay a solvency fee and have all their quarterly tax reports filed through the 2nd quarter of the year prior to the calendar year of the solvency fee election. The solvency fee is due within 30 days of receiving notification from the department.
To view the notification online, please log in to your account at
www.uctax.pa.gov and select the Correspondence option from the menu.
Payments for Solvency fee elections for the calendar year 2024 for Election for Relief from Charges and Notice of Solvency Fee dated 10/30/2023 are due on 11/29/2023.
American Rescue Plan Act
On March 11, 2021, the President signed the American Rescue Plan Act into law. This Act amends certain provisions of the Continued Assistance for Unemployed Workers Act of 2020 and extended the previous expiration date of March 14, 2021, to September 6, 2021.
The applicable period for emergency unemployment relief for governmental entities and nonprofit organizations was extended to weeks of unemployment ending on or before September 6, 2021.
Additionally, the amount of emergency relief for weeks of unemployment beginning after March 31, 2021, increased from 50 percent of compensation paid to 75 percent.
Statement of Account Changes
Effective with the reimbursable billing Statement of Account (SOA) dated April 11, 2021, the SOA reflects the extension of the 50% Benefit Charge reimbursement program to include claim weeks ending January 2, 2021 to April 3, 2021. Additionally, with the May 11, 2021 SOA, the reimbursement information for claim weeks ending April 10, 2021 to September 4, 2021 will be calculated using the 75% formula.
Continued Assistance Act
On December 27, 2020, the Continued Assistance Act was enacted into law. This Act extended the timeframe for state and local governmental entities, certain nonprofit organizations, and federally recognized Indian tribes that make payments in lieu of contributions to their state’s unemployment fund to be reimbursed at 50 percent for payments made on benefit claims. The period covered by this Act includes claims paid from January 2, 2021 to March 13, 2021.
Act 9 of 2020 Automatic Relief from Charges
The Department has begun processing the relief from charge credits related to COVID 19 claims.
The credits from the automatic relief from charges for eligible claims for reimbursable employers that had an approved 2020 solvency fee election were processed on 11/10/2020 and were included on the Statement of Account dated 11/11/2020 for Article XI reimbursable employers. The credits appeared on the Statement of Account dated 1/11/2021 for Article X and Article XII employers.
Most relief from charge credits were issued in November 2020, however, additional relief from charge credits may continue to show on future Statements of Account.
Changes to Statements of Account for Reimbursement of Benefit Charges as a Result of COVID-19
As a result of the national pandemic, Governor Wolf signed Act 9 of 2020, the COVID-19 Proclamation of Disaster Emergency, on March 6, 2020.
Act 9 of 2020 provided for the following temporary amendments:
- Generally, if not precluded by federal law, reimbursable employers who were approved to participate in the relief from charges option for the calendar year 2020 were entitled to automatic relief if a claimant’s unemployment was due to the COVID-19 outbreak.
- Reimbursable employers who were not approved to participate in the relief from charges option for the calendar year 2020 had 120 days from the mailing date of the Statement of Account to repay benefit charges related to COVID-19.
- Late payments for reimbursable benefit charges stemming from COVID-19 (beginning with AB date 03/06/2020 through and including 12/26/2020) did not incur interest until January 1, 2021.
- Interest-free payment plans for benefit charges related to COVID-19 were available for reimbursable employers demonstrating financial hardship.
Please note that Act 9's temporary changes to the Pennsylvania UC Law ended on January 1, 2021.
- The best way to contact us is by logging into your account at
www.uctax.pa.gov and selecting “Inquiries” from the left-side menu and then “Submit Inquiry.” Select “COVID-19” from the “Inquiry Subject” list.