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Property Management Blog

Unemployment opt-out for Idaho business officers


System - Thursday, January 26, 2012
Last summer, the Idaho Department of Labor announced the decision to allow the estimated 30,000 corporate officers in Idaho to opt-out of paying into unemployment insurance and forfeit their eligibility to receive unemployment benefits. Those that chose to opt-out had the effect go into place on January 1st. House Bill 80 also now requires that for an officer to collect unemployment they have to prove they are no longer legally associated with the corporation. 

Previously, many self-employed and small business owners were subject to the tax even though they never had any intention of ever collecting benefits, so it will provide an opportunity for small businesses to operate with slightly lower costs. For 2012, the standard Idaho unemployment tax is 3.36% on the first $34,100 in wages of each employee. State unemployment is currently deductible against federal unemployment payments, which means there will be an increase of $392 in federal unemployment payments for those that opt-out as they will have to pay the maximum $434 federal rate. 

Perhaps an even greater effect of the bill is the prevention of exploiting unemployment benefits. Formerly, officers that control how and when they work could declare themselves laid off and collect benefits under the job-attached status. This meant they were expecting to be called back to work in a matter of weeks or months and were thereby exempted from job search requirements and essentially used the benefits to sustain themselves in slower periods. From the fourth quarter of 2007 to the first quarter of 2010, 5200 corporate officers collected roughly $36.2 million more in benefits than they had paid in. The remaining officers with no intent of ever claiming benefits and the rest of the workforce essentially paying for their benefits. 


Brandon Morgan 
Legerity Property Management, Inc. 

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