Experience Rate

The Missouri Employment Security Law includes a merit or experience rating provision as an incentive for employers to maintain stable employment, review claims and reduce unemployment.

The Division keeps a record of experience for each employer's account. The experience includes taxable wages reported, contributions paid (including voluntary payments) and benefits charged. Unemployment taxes paid are credited to an employer's account. Unemployment benefits paid to eligible claimants are charged to the accounts of the claimant's employers during the base period of the claim. These factors that are recorded in the employer's account through the preceding July 31st are used to compute annual tax rates after the employer becomes eligible for an experience rate.

Eligibility and Computation

An employer generally becomes eligible for an experience rate after two full years of liability under the law. An experience rate is based on a ratio arrived at by dividing an employer's account balance by its average annual taxable payroll. Rates could range from 0.0% to 6.0%, not including surcharge and/or a percentage increase/decrease. Rates for employers participating in the shared work program could range from 0.0% to 9.0%, not including surcharge and/or a percentage increase/decrease. For additional information, see Missouri Revised Statutes.

An employer's account balance is the difference between total benefits charged and debited and contributions paid and credited, plus any unassigned surplus, through the preceding July 31st.

Depending on how long an employer was subject to the law and reported quarterly wages prior to the last July 1st, an employer's average annual taxable payroll is either:

1. One-third of the total taxable wages paid during the 36-month period prior to the last July 1st, or
2. If no wages for employment were paid during any one calendar half year in the 36-month period prior to the last July 1st, the average annual taxable payroll is twice the amount of taxable wages paid during the calendar half year in this period wherein the taxable payroll was highest, or
3. The average annual payroll is the total taxable wages paid during the 12-month period prior to the last July 1st, or
4. If no wages for employment were paid during any one calendar half year in the 12-month period prior to the last July 1st, the average annual payroll is twice the amount of taxable wages paid during the calendar half year in the 24-month period prior to the last July 1st wherein the taxable payroll was highest.

A determination of the annual tax rate for the following year is mailed to all employers during the month of November. Such determinations are subject to appeal and a hearing by an Appeals Tribunal, provided a protest is made in writing or by FAX within 30 days of the mailing date of the rate determination. (See Appeal Rights.)

Voluntary Payments

Employers who are eligible for a rate calculation may submit voluntary payments for the purpose of reducing their new tax rates. The Division mails a "Voluntary Payment Work Sheet" with each employer's annual rate notification. The worksheet has simple formulas to show whether it would be advantageous for an employer to make a voluntary payment. The deadline for making a voluntary payment is January 15 of the year which the payment will affect.