Unemployment taxes for multi-state employees

State Unemployment Insurance (SUI) — or State Unemployment Tax Act (SUTA) — are payroll tax contributions that provide temporary wage continuation to an employee in the event they become unemployed through no fault of their own.

Contributions to SUI are made to the state in which the employee would expect to claim unemployments benefits, in the case that he or she becomes unemployed. This is often easy to determine, as commonly, employees live and work in a single state.

However, if an employee lives and works in more than one state, then the employer and the employee need to determine a single state to which they will contribute SUI taxes (i.e., the employee’s primary SUI state). To determine the employee’s primary SUI state, employers and employees should follow the ”Localization of Work” provisions published by the IRS, which includes factors like where the employee’s “base of operations” is, or where their services are “directed or controlled from”.

Once that choice has been made, Check allows employers to enter this information for each employee, and ensure that SUI taxes are only withheld in that primary state. This document will explain how to enter that information, and what effects to expect.

In Check, an employee’s primary SUI state is based on the state of that employee’s primary workplace.

Employees in Check are assigned workplaces, and one of those workplaces is designated as the employee’s primary workplace. If an employee is only assigned one workplace, then that workplace is automatically set as the employee’s primary workplace; otherwise, this selection needs to be made manually.

Because primary workplace serves this important purpose in tax calculations, it being undefined for an employee will put that employee in a blocking onboard status (more details here).

While we’ve only talked about SUI taxes so far, there are actually several other tax types that follow the same Localization of Work provisions as SUI, and are affected in the same way as SUI by setting an employee’s primary workplace. These include:

The full list of taxes that follow this behavior is listed at the bottom of this article.

For these taxes, they will only be included on a payroll item if that employee’s primary workplace is a workplace in that tax’s state, even if the employee earned wages in that state.

Other taxes such as income taxes will still be based on wages earned in each state, as well as other factors like reciprocity.

To view or change the primary workplace for an employee in Console, first navigate to that employee by clicking the Employees tab, scrolling down to Active Employees, and selecting the employee you wish to view.

Then on the Employee Info tab, scroll down to Workplaces. You should see an indicator next to the workplace that is the employee’s primary workplace. To change the primary workplace, hover over a workplace and select the “Make primary” option that appears.

Finally, click “Proceed” in the confirmation modal to complete the change.

As mentioned in the above confirmation modal, changes to primary workplace that should have been effective dated in the past should be raised to Check Support to ensure that previously calculated payrolls are recalculated with the correct primary workplace. This is akin to changing the workplace at which an employee’s wages were earned on a previous payroll.

If the primary workplace change is only meant to be effective going forward, then a correction is not required. However, note that future payrolls may have SUI Taxable Wage Credits applied, as explained below.

When the primary workplace — and hence, the primary SUI state — is changed in the middle of the year, most state unemployment agencies allow for a taxable wage credit to be applied from the previous state to new state. This reduces the employer’s overall SUI tax burden for the new state.

For example, let’s say an employee has accumulated $5,000 in taxable wages for IL SUI, and then changes their primary workplace (and their primary SUI state) from IL to IN. That $5,000 will be applied as a credit towards IN SUI, which in 2024 has a wage base of $9,500. This means that the employee will only need an additional $4,500 in taxable wages for IN SUI, rather than the full $9,500.

Different state unemployment agencies may or may not recognize taxable wage credits from other states, or have different limits on the amount of credits that can be claimed. These rules are already incorporated in Check’s tax calculations, and SUI taxable wage credit will be calculated and applied automatically.

Below are all of the taxes that automatically follow localization of work provisions, and will be taxed based on the employee's primary workplace instead of where wages were earned.

Alabama Employment Security Assessment Alabama State Unemployment Tax Alaska State Unemployment Tax Alaska SUI Arizona State Unemployment Tax Arkansas State Unemployment Tax California Employment Training Tax California SDI California State Unemployment Tax Colorado Paid Family and Medical Leave - Employee Colorado Paid Family and Medical Leave - Employer Colorado Solvency Surcharge Colorado State Unemployment Tax Colorado Support Surcharge Connecticut Paid Leave Connecticut State Unemployment Tax DC Administrative Funding Tax DC Paid Family Leave - Employer Delaware State Unemployment Tax Delaware Training Tax District of Columbia State Unemployment Tax Florida State Unemployment Tax Georgia Administrative Assessment Tax Georgia State Unemployment Tax Hawaii Employment And Training Tax Hawaii State Unemployment Tax Idaho Administrative Reserve Idaho State Unemployment Tax Idaho Workforce Development Illinois State Unemployment Tax Indiana State Unemployment Tax Iowa State Unemployment Tax Kansas State Unemployment Tax Kentucky Service Capacity Upgrade Fund Surcharge Tax Kentucky State Unemployment Tax Louisiana State Unemployment Tax Maine CSSF Maine State Unemployment Tax Maine UPAF Maryland State Unemployment Tax Massachusetts COVID-19 Recovery Assessment Massachusetts Employer Medical Assistance Contributions Massachusetts Paid Family and Medical Leave - Employee Massachusetts Paid Family and Medical Leave - Employer Massachusetts State Unemployment Tax Massachusetts Workforce Training Fund Michigan State Unemployment Tax Minnesota State Unemployment Tax Minnesota Workforce Development Fee Mississippi State Unemployment Tax Mississippi Workforce Training Enhancement Missouri State Unemployment Tax Montana Administrative Fund Tax Montana State Unemployment Tax Nebraska State Unemployment Tax Nevada Career Enhancement Program Nevada State Unemployment Tax New Hampshire Administrative Contribution New Hampshire State Unemployment Tax New Jersey Employer SDI New Jersey Family Leave Insurance New Jersey SDI New Jersey State Unemployment Tax New Jersey SUI New Mexico State Unemployment Tax New York Reemployment Fund New York State Unemployment Tax NJ Work Force Development/Supplemental Work Force North Carolina State Unemployment Tax North Dakota State Unemployment Tax Ohio State Unemployment Tax Oklahoma State Unemployment Tax Oklahoma Technology Fund Oregon Paid Family and Medical Leave - Employee Oregon Paid Family and Medical Leave - Employer Oregon State Unemployment Tax Pennsylvania State Unemployment Tax Pennsylvania Local Services Taxes (LSTs) Rhode Island Job Development Surcharge Rhode Island SDI Rhode Island State Unemployment Tax South Carolina State Unemployment Tax South Carolina SUI Admin Contingency Assessment Tax South Dakota Administrative Fee South Dakota Employer Investment Fee Tax South Dakota State Unemployment Tax Tennessee State Unemployment Tax Texas State Unemployment Tax Utah State Unemployment Tax Vermont State Unemployment Tax Virginia State Unemployment Tax Washington Employment Administration Fund (EAF) Washington Long-Term Care Insurance Washington State Unemployment Tax West Virginia State Unemployment Tax Wisconsin State Unemployment Tax Wyoming State Unemployment Tax