This component is the only one of the three components of the unemployment tax rate that does not reflect an employer’s own experience.  This component is generally a flat 1.0% for all contributing employers with five or more years in business.  However, for employers with no, or very few, benefit charges the Non-chargeable Benefits Component (NBC) can be lower than the standard 1.0%.  The following reductions apply:

From 1993 through 1995, the NBC will be 0.5% if the employer has no benefits charged to their account for the 60 months (5 years) ending the previous June 30th.

From 1996 through 2002, the NBC will be 0.5% if either (1) the employer has no benefits charged to their account for the 60 months (5 years) ending the previous June 30, or (2) the employer’s Chargeable Benefits Component is under 0.2%.

For 2003 and after, the NBC will be 0.5% if the employer’s chargeable benefits component is under 0.2%.  If the employer has no benefits charged to their account for the 60 months (5 years) ending the previous June 30, the NBC will be 0.1%.

Also, in 1996 through 2002, the NBC will be 0.4% if the employer has no benefits charged to their account for the 72 months (6 years) ending the previous June 30. 

For 2003 and after, the NBC will be 0.9%.

From 1997 through 2002, the NBC will be 0.3% if the employer has no benefits charged to their account for the 84 months (7 years) ending the previous June 30. 

For 2003 and after, the NBC will be 0.08%.

From 1998 through 2002, the NBC will be 0.2% if the employer has no benefits charged to their account for the 96 months (8 years) ending the previous June 30. 

For 2003 and thereafter, the NBC will be 0.07%.

From 1999 through 2002, the NBC will be 0.1% if the employer has no benefits charged to their account for the 108 months (9 years) ending the previous June 30. 

For 2003 and after the NBC will be 0.06%.

This component is used to pay the costs of unemployment benefits, which are pooled among employers, i.e., benefits not charged directly against any particular employer’s account and benefits charged against employers that go out of business.

For example, if a worker is disqualified for benefits for quitting a job or for being fired, but re-qualifies for benefits by getting a new job and earning a required amount, then unemployment benefits may be paid if that worker later becomes unemployed.  But the benefits will not be charged against the account of the employer involved in the quit or firing.

Another example is that of a bankrupt employer, whose former workers will receive benefits, even though the UIA probably will not receive further tax payments from the employer.  Those benefits will be financed from the pooled reserves of all employers.  The Non-chargeable Benefits component provides the money for this pooled reserve.

For an employer whose business has existed for five years or more, the unemployment tax rate will equal the Chargeable Benefits component plus the Account Building component plus the Non-chargeable Benefits Component.  The minimum possible rate will be 0.06%.

As mentioned before, for an employer in the first two years of liability, the new business rate of 2.7% applies, except for employers in the construction industry, and none of the calculations or components described above apply.

In the third year of liability, the rate is calculated by taking 1/3 of the Chargeable Benefits Component, and adding 1.8%.  The maximum rate in the third year of liability is 3.9%; the minimum rate is 1.8%.  For employers in the construction industry, taking 1/3 of the Chargeable Benefits Component, and adding 2/3 of the average construction rate calculate the rate in the third year.

In the fourth year of liability, the rate is calculated by taking 2/3 of the Chargeable Benefits Component, and adding 1.0%.  The maximum rate in the fourth year of liability is 5.2%; the minimum rate is 1.0%.  For employers in the construction industry, the rate in the fourth year is calculated by taking 2/3 of the Chargeable Benefits Component and adding 1/3 of the average construction rate.  A non-reporting penalty will increase these maximums.