Florida Unemployment Compensation Tax
Who Must Report Wages and Pay UC Taxes?

General Liability Requirements

A business is liable for unemployment compensation tax if, in the current or preceding calendar year, the employer: (1) has paid at least $1,500 in wages in a calendar quarter; or (2) has had at least one employee for any portion of a day in 20 different calendar weeks in a year; or (3) is liable for the Federal Unemployment Tax as a result of employment in another state.

Special Liability Requirements for Certain Employer Types

Coverage is extended to employees of nonprofit organizations (such as religious, charitable, scientific, literary, or education groups) that employ 4 or more workers for any portion of a day in 20 different calendar weeks during the current or preceding calendar year. Exceptions to this coverage are churches and church schools. For purposes of the Florida Unemployment Compensation Law, a nonprofit organization is one as defined in Section 3306(c)(8) of the Federal Unemployment Tax Act and Section 501(c)(3) of the Internal Revenue Code.

Coverage is also extended to employees of the State of Florida and any city, county or joint governmental unit.

Nonprofit organizations and governmental entities have the option to be taxpaying employers or reimbursing employers. A reimbursing employer is one who must pay the Unemployment Compensation Trust Fund on a dollar-for-dollar basis for the benefits paid to its former employees. Wage reports are submitted each quarter and benefit charges are paid when billed by the division. The employer electing the taxpaying method must submit quarterly reports with payments on a quarterly basis. To elect a reporting method, the employing unit must complete and sign a special form electing a payment method for a minimum two-year period. If the employing unit wishes to change its method of payment, it must make written application no later than December 1st of the second year of reporting, requesting to change methods on January 1st of the subsequent year.

Agricultural employers who, in the current or preceding year, have paid $10,000 in cash wages in a calendar quarter or who have five or more workers for any portion of a day in 20 different calendar weeks are liable for unemployment compensation tax. Employers who establish liability under this provision must also report, under the same account number, any other employees (except domestic employees) although the employment was for less than 20 different weeks or the wages paid were less than $1,500 in any one quarter.

Employers of domestic employees (maids, cooks, maintenance workers, chauffeurs, social secretaries, caretakers, private yacht crews, butlers and houseparents) who, in the current or prior year, have paid $1,000 in cash wages in any one calendar quarter are liable for unemployment compensation tax. Employers liable under this provision will not report general employees or agricultural employees unless they also establish liability under these other provisions of the Law.

Likewise, employers liable for their general employment will not report domestic or agricultural workers unless they also establish liability in these categories. In making a determination of liability, the wages paid in agricultural employment and in domestic employment must be counted separately from wages paid in other types of employment.

Following is a chart that illustrates coverage requirements for four different employers (A, B, C, and D). Columns two, three and four list employment for each sample employer and the column on the far right lists the coverage (liability) required.

Voluntary Coverage

Employers who are not otherwise liable under the law may apply for coverage for their employees. Employers liable for one type of employment (general, for example) may elect to cover their employees in other types of employment (agricultural and/or domestic). Election of voluntary coverage obligates an employing unit to be a taxpayer for a minimum of one calendar year. Forms for election of coverage may be obtained from the Employer Information Center.

Employer-Employee Relationship

Employment means any service performed by an employee for the person employing that individual.

An employee is an individual as defined under the common law rules for employer-employee relationships. An employee is a person who is subject to the will and control of the employer not only as to what shall be done, but how it shall be done.

Any officer of a corporation performing services for the corporation is an employee of the corporation during all of the tenure of office, regardless of whether compensation for such services is received. Compensation, other than dividends upon shares of stock and board of director fees, shall be presumed to be payment for services performed.

Sales personnel are considered covered employees. The fact that a salesperson working for an employer is paid solely by commission does not remove the person from the employer's direction and control. The law provides specific exemption only for real estate agents, insurance agents, and barbers who are paid solely by commission. If they are paid by salary only or by salary and commission, both are taxable and the exemption does not apply.

An employer is the person, partnership, or corporation for whom service is performed. Common law recognizes a master-servant relationship in the exercise of will and control by the employer over the employees. The employer can direct what services will be performed, when and where they will be performed, and can set standards for the quality of work to be rendered.

In agricultural labor, either the farm operator or the crew leader may be considered the employer. An individual must hold a valid certification of registration under the Farm Labor Contractor Registration Act of 1993 to be a crew leader. The crew leader is the employer if he/she (1) provides the crew, (2) supervises the work being performed by the crew, (3) has the right to terminate employment, and (4) is responsible for the payment of wages to the workers.

The farm operator is the employer if (1) the individual is an employee of the farm operator under common law rules of master and servant or (2) the worker is furnished by the crew leader, but is not treated as an employee of the crew leader, i.e. the crew leader is acting on behalf of the farm operator, rather than as an employer, or (3) the crew leader has entered into a written agreement with the farm operator under which the crew leader is designated as an employee of the farm operator.

An independent contractor is one who is not subject to the will and control of the employer. The employer does not have the right to control or direct the manner or method of performance, although the results to be accomplished are controlled. Independent contractors hold themselves out to the public as such. Generally, they furnish materials as well as labor and use their own tools in the performance of the work. Services performed by independent contractors cannot be summarily terminated without recourse. A contract for labor only will normally be considered a contract of employment. How the worker is treated, not a written contract, determines employment status.

Employment Not Covered

Several types of employment are not covered for unemployment compensation purposes and the workers performing these types of employment are not considered in determining an employer's liability. Some of these exemptions include:

• Services by a sole proprietor or a partner.
• Services by employees of a church or convention or association of churches, or of organizations operated for religious purposes and which are operated, supervised, controlled, or principally supported by a church, convention, or association of churches.
• Services of a duly ordained, commissioned, or licensed minister of a church, in the exercise of the ministry or by a member of a religious order, in the exercise of duties required by such an order.
• Services for a school, college, or university, by a student enrolled and attending classes there.
• Services by certain students working for credit on a program combining academic instruction with work experience, such as CBE (Cooperative Business Education) or DCT (Diversified Cooperative Training) students.
• Services performed for a son, daughter, or spouse, including step relationships, and by children, or stepchildren, under the age of 21 for their father or mother. When the employing unit is a partnership, an exempt relationship must exist to all partners or there is not an exemption. (For example, a daughter working for a father/mother partnership.) This exemption does not apply to corporations.
• Services performed by insurance agents, real estate agents, or barbers when paid solely by commission.
• Services performed on a fishing vessel that weighs ten net tons or less.
• Services performed as a student nurse in the employ of a hospital or a nurses' training school, by an intern in the employ of a hospital, or by a hospital patient.
• Services in a rehabilitation facility for the mentally handicapped, or physically handicapped or injured, by persons receiving such rehabilitative service.
• Services by persons under age 18 in the delivery or distribution of newspapers.
• Services performed by nonresident aliens, who are temporarily present in the United States as nonimmigrants under subparagraph (F) or (J) of Section 101(a)(15) of the Immigration and Nationality Act.
• Services performed by aliens in agricultural labor, who have entered the United States pursuant to SS 214(c) and 101(a)(15)(H) of the Immigration and Nationality Act.
• Services performed for the government by elected officials; by members of the legislature; by members of the judiciary; by those serving on a temporary basis in cases of fire, storm, snow, earthquake, flood, or similar emergencies; or by those serving in an advisory capacity.
• Services by direct sellers who are contracted to sell or solicit consumer goods to homes or any place other than a permanent retail establishment and whose substantial remuneration is directly related to sales.
• Services performed by speech, occupational, and physical therapists that are nonsalaried and working pursuant to a written contract with a home health agency as defined in Section 440.462 of the Florida Statutes.
• Services performed by a driver for a private delivery or messenger service if the driver pays all expenses, owns the vehicle and pays all operating costs, is paid by delivery or on commission, is free to accept or reject jobs, determines routes and methods of performance, and has a contract stating the driver is an independent contractor.
• Services performed by inmates of a penal institution (effective 10-01-98).
• Services performed by election officials or workers who are paid less than $1,000 in a calendar year (effective 10-01-98).

Inactivation of Account

An employer’s account is made inactive when the employer ceases to have payroll and notifies this division of the date this occurred. If an account is inactive and employment resumes, this division must be notified, wages paid must be reported and taxes must be paid. An Employer Registration Report (UCS-1) must be completed in order to reopen the account.

Termination of Liability

Termination of liability is not the same as inactivating an account. An employer’s account is eligible for termination if the liability requirements have not been met for an entire calendar year. In this instance, application for termination of liability must be submitted no later than April 30 of the following year in order to be considered timely. Once an account is officially terminated, liability must be reestablished as described in this handbook. Employers are responsible for submitting quarterly reports until they are officially notified that liability has been terminated.

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For information about Kulzick Associates, PA services for small businesses: SBS - Services

See also:
        Federal (U.S.) Payroll Taxes
        New Hire Reporting In Florida
        Setup payroll and payroll taxes
        Small Business Services

© Copyright 1999 Raymond S. Kulzick. All rights reserved. 90105.