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Comment by ctdonath | Hacker News Reader

"2. If I fire an employee, a portion of the cost of that person's unemployment claims is charged back to me."

Can you elaborate on this? It's something I've long heard and failed to grok. How can an employer, as normal business practice, have to still pay a fired employee any amount?

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It works like this:

Every year you have to pay a percentage of your total payroll as a tax, called Unemployment Insurance. If someone is fired or laid off, its from this pool their unemployment checks are drawn.

The percentage each company pay is based off a table. On this table there's 2 rates listed for each business size (its tiered, bigger businesses pay more). Rates last year for my company were around 1.7% and 3.2%, IIRC.

So, if you fired >=1 person in that year, you have to pay the higher rate. If you fired nobody, you pay the lower rate.

Note: if you fired 1 or 10 people it doesn't matter - you're paying the higher rate.

You have to pay for unemployment insurance. The more people who make claims against you, the higher your insurance gets. You probably aren't going to get charged 100% of the employee's unemployment, but you get charged a goodly chunk.

That's exactly right. For unemployment insurance you pay a percentage of your payroll to the government. The percentage depends upon the number of claims your ex-employees have put on the pool of money in the unemployment insurance scheme. More claims means a higher percentage.

That makes the cost of a replacement employee higher because you're paying for the cost of prior employees' unemployment claims when you are making unemployment contributions for the new employee.

You act like this was an unknown cost of having employees.

Seriously? I'm surprised anyone is still hiring at all in the US! Sheesh, what a policy. "Hello independent contractors" -- I hear you.

The IRS is very picky about what constitutes an independent contractor. This has long been abused by companies trying to skirt employment law and avoid payroll taxes. They have a litmus test of sorts to determine whether someone is an employee or an independent contractor (tl;dr: if you treat them like an employee, they're an employee). And of course, there are significant penalties for getting this classification wrong.

For more details, go to the source: http://www.irs.gov/businesses/small/article/0,,id=99921,00.h...

My lawyer (a tax attorney) said this is rarely prosecuted on independent contractors who are themselves incorporated (along with things like actually have a contract etc). From my own experience this is true as well. Think about it, the IRS would have to give back all of the matching that the contractor (agent) did when they collect from the employer (principal).

Edit: talk to your own attorney though.

What a policy? What would you do with people who get fired? It's pretty rare to lose your job at one place and pick up a new one the same day. How are they going to finance their life until they find a new job?

In other countries where employee protections are better there is usually an actual written contract in place that says employment must continue up to two months after notice is given from either party.

And yes, that does make contractors more practical but that's good because it pushes contract rates up.

Federal Unemployment Tax (FUTA) page 29:

http://www.irs.gov/pub/irs-pdf/p15.pdf

If you are in the lower rate, i.e 0.6% of the first $7000 in wages, the FUTA tax is... a whopping $42

> It's something I've long heard and failed to grok.

Where do you think that the money to pay unemployment comes from?

Sorry, it was the cognitive dissonance of being required to pay someone who was terminated for the purpose of not having to pay them.

I'd like to hire people for some long term work, but cumulative BS like this makes me not bother.

You just pass the cost on to your employee. Hire them for X/(1 + expected tax rate) instead of X.

Any other devs (front end, back end and or mobile) here now on unemployment or are on and off Obama's payroll?

If so why?

1. Lack of experience 2. You did a start-up for long time & having trouble finding regular work (that's me). 3. Something else?

I hate being unemployed and feel working on my start-up for over four years alone in my garage has handicapped me professionally. Since the investment money ran out for my start-up, I have had two front-end dev jobs. Both positions were at local digital web agencies and both lasted under a year. Since getting laid off from the last job Ive had a hell of time getting my next job. I have 22 months of professional experience and 3 years of coding for my start-up.

I wonder if there are similar stories and experiences fellow members here faced? Also, what did you do to land your next coding job or what are you doing now?

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