Covered employers contribute what percent of their covered employees' gross labor payroll?

Covered employers contribute what percent of their covered employees' gross labor payroll?

• A. 1 Percent
• B. 3 Percent
• C. 5 Percent
• D. 7 Percent

Answer: (B)

The main idea here is that employers fund unemployment insurance by paying a tax that is a percentage of their gross payroll for covered employees. This rate is applied to the total gross wages of those employees, up to the wage base, and the money goes to support unemployment benefits. In many standard examples, that rate is three percent, which is why three percent is the best choice. The exact rate can vary by state and experience rating, but three percent is the typical figure used in such questions to illustrate the concept.

The main idea here is that employers fund unemployment insurance by paying a tax that is a percentage of their gross payroll for covered employees. This rate is applied to the total gross wages of those employees, up to the wage base, and the money goes to support unemployment benefits. In many standard examples, that rate is three percent, which is why three percent is the best choice. The exact rate can vary by state and experience rating, but three percent is the typical figure used in such questions to illustrate the concept.