The Unemployment Trust Fund Reserve Ratio is computed by dividing the balance of the Unemployment Trust Fund as of March 31 of the current calendar year by the total taxable wages reported by all employers for the prior calendar year.

Balance of Unemployment Trust Fund (as of March 31)   = Unemployment Trust
                 Total UC Taxable Wages                                  Fund Reserve Ratio

The Unemployment Trust Fund Reserve Ratio determines which column of rates will be in effect for all employers for the rate year beginning on July 1 of the same year. Since July 1, 1986, New Jersey’s unemployment tax tables have included six columns of rates, labeled columns A, B, C, D, E and E+10%. Column A rates, the lowest rates, are applicable when the fund is highest (3.50% of taxable wages, or greater). Column E+10% rates, the highest rates, are applicable when the fund is lowest (below 1.00% of taxable wages).

The trust fund reserve ratio thresholds that trigger various tax columns are modified as follows:

From January 1, 1998, through June 30, 2001, each employer’s rate, except those with a reserve ratio of negative 35.00%, is decreased by 0.1%, with the corresponding reduction paid into the Workforce Development Partnership Fund. Additionally, from January 1, 1998, through December 31, 1998, each employer’s rate, after the 0.1% reduction, was decreased by 12%, with the corresponding reduction paid into the Health Care Subsidy Fund. For calendar year 1999, the employer’s rate was decreased by 10% and in 2000 by 7%, with the corresponding reduction paid into the Health Care Subsidy Fund. From January 1, 2001, through December 31, 2001, there was no reduction to the employer’s rate for payment into the Health Care Subsidy Fund.

Effective July 1, 2001, each employer’s rate, except those with a reserve ratio of negative 35.00%, is decreased by 0.1175% with the corresponding reduction paid into the Workforce Development/Supplemental Workforce Funds.

From January 1, 2002, through March 31, 2002, each employer’s rate, after the 0.1175% reduction was decreased by 36%, with the corresponding reduction paid to the Health Care Subsidy Fund. From April 1, 2002, through June 30, 2002, the employer’s rate was decreased by 85% and from July 1, 2002, through June 30, 2004, by 15%, with the corresponding reductions paid to the Health Care Subsidy Fund. From July 1, 2004, through June 30, 2005, the employer’s rate was reduced by 7%, with the corresponding reduction paid to the Health Care Subsidy Fund. From July 1, 2005, through December 31, 2005, the employer’s rate was reduced by 16% and from January 1, 2006, through June 30, 2006 by 34%, with the corresponding reductions paid to the Health Care Subsidy Fund. Effective July 1, 2006, the rate reduction and payment to the Health Care Subsidy Fund ended.

The Experience Rating Tax Table illustrates combined employer contribution rates (Unemployment Insurance, Workforce Development, Supplemental Workforce Fund and Health Care Subsidy). This table is followed by applicable tax schedules from July 1, 2012, through June 30, 2018.

“Table B” Unemployment Insurance Contribution Rates 
Effective July 1, 2018 – June 30, 2019

“Table C” Unemployment Insurance Contribution Rates
Effective July 1, 2016 – June 30, 2018

“Table E” Unemployment Insurance Contribution Rates
Effective July 1, 2012 – June 30, 2016

Two factors determine an employer’s unemployment tax rate: (1) the Unemployment Trust Fund Reserve Ratio and (2) the Employer’s Reserve Ratio.

The Unemployment Trust Fund Reserve Ratio is computed by dividing the balance of the Unemployment Trust Fund as of March 31 of the current calendar year by the total taxable wages reported by all employers for the prior calendar year.

Balance of Unemployment Trust Fund (as of March 31)   = Unemployment Trust
                 Total UC Taxable Wages                                  Fund Reserve Ratio

The Unemployment Trust Fund Reserve Ratio determines which column of rates will be in effect for all employers for the rate year beginning on July 1 of the same year. Since July 1, 1986, New Jersey’s unemployment tax tables have included six columns of rates, labeled columns A, B, C, D, E and E+10%. Column A rates, the lowest rates, are applicable when the fund is highest (3.50% of taxable wages, or greater). Column E+10% rates, the highest rates, are applicable when the fund is lowest (below 1.00% of taxable wages).

The trust fund reserve ratio thresholds that trigger various tax columns are modified as follows:

From January 1, 1998, through June 30, 2001, each employer’s rate, except those with a reserve ratio of negative 35.00%, is decreased by 0.1%, with the corresponding reduction paid into the Workforce Development Partnership Fund. Additionally, from January 1, 1998, through December 31, 1998, each employer’s rate, after the 0.1% reduction, was decreased by 12%, with the corresponding reduction paid into the Health Care Subsidy Fund. For calendar year 1999, the employer’s rate was decreased by 10% and in 2000 by 7%, with the corresponding reduction paid into the Health Care Subsidy Fund. From January 1, 2001, through December 31, 2001, there was no reduction to the employer’s rate for payment into the Health Care Subsidy Fund.

Effective July 1, 2001, each employer’s rate, except those with a reserve ratio of negative 35.00%, is decreased by 0.1175% with the corresponding reduction paid into the Workforce Development/Supplemental Workforce Funds.

From January 1, 2002, through March 31, 2002, each employer’s rate, after the 0.1175% reduction was decreased by 36%, with the corresponding reduction paid to the Health Care Subsidy Fund. From April 1, 2002, through June 30, 2002, the employer’s rate was decreased by 85% and from July 1, 2002, through June 30, 2004, by 15%, with the corresponding reductions paid to the Health Care Subsidy Fund. From July 1, 2004, through June 30, 2005, the employer’s rate was reduced by 7%, with the corresponding reduction paid to the Health Care Subsidy Fund. From July 1, 2005, through December 31, 2005, the employer’s rate was reduced by 16% and from January 1, 2006, through June 30, 2006 by 34%, with the corresponding reductions paid to the Health Care Subsidy Fund. Effective July 1, 2006, the rate reduction and payment to the Health Care Subsidy Fund ended.

The Experience Rating Tax Table illustrates combined employer contribution rates (Unemployment Insurance, Workforce Development, Supplemental Workforce Fund and Health Care Subsidy). This table is followed by applicable tax schedules from July 1, 2012, through June 30, 2018.

New Jersey uses the “reserve ratio” method to determine unemployment tax rates for subject employers. A record is maintained for each employer showing the contributions paid, unemployment benefits charged to that account and taxable wages. The cumulative benefits are subtracted from the cumulative contributions. The resulting value is known as the “Reserve Balance.”

Employer Contributions – Benefits Charged = Reserve Balance

Employer contributions include all payments made as of January 31 of any calendar year. Benefits charged include only those paid to claimants through December 31 of the previous calendar year.

The Reserve Balance is divided by average annual taxable wages (for the last three or five calendar years, whichever is higher) and the product is the “Reserve Ratio.”

Reserve Balance = Reserve Ratio
Average Annual Taxable Wages
(last 3 or 5 years)

The employer’s Reserve Ratio will fall within one of the 28 categories as shown in this Experience Rating tax table. After establishing the employer’s Reserve Ratio category and determining which particular schedule of rates is in effect, the employer’s unemployment tax rate can be ascertained.

In some cases, however, an employer’s Reserve Ratio is not used to determine the employer’s combined UI/WF/HC contribution rate. Three such rating categories, and corresponding employer contribution rates, are shown here:

Unemployment Trust Fund Reserve Ratio

(1) New Employer Rate
New Jersey employers are assigned new employer rates until they have established three consecutive full or partial years of contribution payment experience. Effective July 1 of the fourth year of subjectivity, rates are assigned based on the employer’s unemployment experience history.

(2) Specially Assigned Rates (positive) and (3) Specially Assigned Rates (negative)
Specially assigned rates apply to employers who previously had sufficient experience to receive an “experience rate” but subsequently paid no contributions on wages for employment with respect to at least one of the last three calendar years. Category (2) employers have positive Reserve Balances; category (3) employers have negative Reserve Balances.

At the beginning of each fiscal year, any employer whose rate is based on experience may lower his unemployment tax rate by making a voluntary payment to increase his Reserve Ratio. You can do this online here. We must receive your remittance within 30 days of the mailing date of the “Notice of Employer Contribution Rates” and you must meet the requirements stated therein. Voluntary contributions apply only to the employer unemployment insurance rate.

When unemployment insurance benefits are paid to a claimant, a charge equal to the amount of benefits is made to the account of the employer for whom the individual worked. If the claimant worked for more than one employer during the period on which his benefits are based, each base-year employer is charged for each benefit payment in proportion to the amount of wages that the employer paid the claimant during the base-year to total wages received during that period. That is, under proportional charging, all base-year chargeable employers share in the cost of each week of benefit payments.

The employer is notified of these charges quarterly on Form B-187Q, “Unemployment Benefits Charged to Experience Rating Account.” We recommend that employers check these listings carefully with their payroll records to help prevent incorrect charges and improper benefit payments.

When a claimant is determined to be ineligible for or disqualified from unemployment benefits, no associated costs for benefit payments should be reflected on his/her chargeable employer’s (or employers’) B-187Q notice(s) for the period of ineligibility or disqualification. However, a claimant who is separated from employment by either a chargeable base-year employer or a non-chargeable lag-period employer due to voluntary leaving, misconduct or gross misconduct, may become eligible for benefits by fulfilling legally prescribed criteria for removal of these disqualifications. Effective January 4, 1998, an amendment to the New Jersey Unemployment Compensation Law provides for the relief of charges to a contributory employer’s experience rating account when an individual’s separation from employment is for reasons that are disqualifying under the law. Thus, even though an individual may overcome an imposed disqualification or a potential disqualification, and is entitled to receive unemployment benefits, the employer’s account will not be charged for the benefits that occur subsequent to the disqualifying separation. (Refer to Chapter II, Section 2, “Relief of Benefit Charges For Disqualifying Separations.”)

When the relevant criterion is met in cases involving voluntary leaving or misconduct separation issues, any chargeable employer is notified in writing of the claimant’s potential eligibility for benefits. The cost of any subsequently paid benefits will appear on B-187Q notices mailed to the claimant’s chargeable employer(s). Because a disqualification due to gross misconduct involves the immediate cancellation of wage credits earned with the employer prior to the date of discharge, the employer’s account will not be charged for benefits that are compensable after the claimant re-qualifies.

An employer’s disability tax rate is computed in a manner similar to the unemployment rate. A “reserve ratio” system incorporates (1) the employer’s excess or deficit Reserve Balance percentage, and (2) the condition of the State Disability Benefits Fund.

A record is maintained for each employer showing the State Plan disability benefits charged, contributions paid (both employer and worker) and taxable wages. The benefits are subtracted from the contributions to yield the Reserve Balance.

Contributions (Employer & Worker) – Benefits Charged = Reserved Balance

The contributions are those paid as of January 31. The benefits charged are those paid to claimants as of December 31.

The Reserve Balance is reduced by $500.00 and then divided by the average annual taxable wages (for the last three or five years, whichever is higher) to give the Excess or Deficit Reserve Balance Percentage.

Reserve Balance (Reduced By $500.00) = Excess or Deficit Reserve
         Average Annual Taxable Wages           Balance Percentage
                (last 3 or 5 years)

This percentage will determine the preliminary rate, as shown in the table below:

* CR indicates that we have paid out more in benefits to your employees than you have paid in contributions. Such situations result in higher employer rates.

The excess or deficit Reserve percentage is not calculated if:

1. There were one or more years during the past three years in which no contributions were paid to the fund, or

2. The excess or deficit Reserve Balance is $500.00 or less. The preliminary rate assigned under (1) is 0.50% and under (2) is 0.25%.

The law provides that an employer’s preliminary rate cannot be 0.20% higher nor 0.10% lower than the unadjusted preliminary rate for the prior fiscal year. The preliminary rate is adjusted according to this provision except when the basic rate of 0.50% has been assigned, in which case no adjustment is made.

An employer’s disability rate can be further modified according to the condition of the State Disability Benefits Fund. Depending on the size of the fund reserve percentage, rates can be raised, lowered, or remain unchanged.

If a State Plan disability claim’s base year had more than one subject employer, in most cases a charge equal to the amount of disability benefits paid is made only to the account of the claimant’s most recent subject employer. (This differs from how unemployment benefits are charged.)

The employer is notified of State Plan benefit charges by Form DS-7CR2, “Notice of Disability Benefits Charged or Credited.”

When the entire organization, trade or business, or substantially all the assets of an employer subject to the law are acquired by another entity, the unemployment tax rate of the acquired entity is automatically transferred to the new employer.

When acquiring another employing enterprise, in whole or in part, the employer is required to notify the Employer Status Section of the Division of Employer Accounts.

There are other changes in legal entity that have the same effect as if there were an actual change in ownership from one individual to another. A change of legal entity occurs when a business becomes incorporated, a sole ownership becomes a partnership or a corporation, or if a partnership adds or changes a partner, etc. Whenever there is such a change, the employer should notify the Employer Status section within the Division of Employer Accounts immediately (see Directory).

If, as a result of employment with two or more employers during a calendar year, a worker had deducted from his/her wages more than the maximum annual contribution amounts for unemployment, temporary disability insurance, family leave insurance, Workforce Development, and Health Care Subsidy purposes, he/she may obtain credit for the excess contributions on his/her New Jersey income tax return. To claim this credit, the worker should obtain Form NJ-2450, “Employee’s Claim for Credit for Excess Unemployment and Disability Contributions,” from the state’s Division of Taxation. The completed Form NJ-2450 should be filed with the New Jersey Gross Income Tax return. Non-New Jersey residents who do not file New Jersey Income Tax returns should file refund Forms UC-9A, W-2 and/or UC-52 directly with the Division of Employer Accounts.

NOTE: W-2 forms, used by the Division of Taxation to document the payment of excess contributions, must include the employer’s New Jersey taxpayer identification number, must show separately the worker’s contribution amounts for unemployment and temporary disability insurance for the tax year, and, if appropriate, must include the plan number of the approved Private Plan for disability insurance.