UI experience rating (and the NYS-100)

What it is

New York employers pay unemployment insurance at a contribution rate that reflects their own history of claims. An employer whose former staff have drawn heavily on the system pays more; one with a stable workforce pays less. That history is the employer’s “experience,” and the rate derived from it is the experience rating.

The NYS-100 is the form that registers a New York business employer for unemployment insurance, withholding tax and wage reporting in one filing.^[1]

Why it matters when you buy

Because the rate can come with the business. The Department of Labor describes a total transfer this way: “the transferring employer’s account is closed and its experience is transferred into your account. Your contribution rate is then determined or redetermined as of the date of the transfer.”^[2]

You also receive notices showing charges for benefits paid to the predecessor’s former employees, applied to your account.^[2] A business that ran a churn-heavy operation before you arrived hands you the bill for that churn in the form of a higher rate.

Where you acquire only part of a business, the Department obtains information from the transferring employer “to determine the percentage of the experience to transfer into your account.”^[2]

Diligence: ask for the rate, not just the payroll

Payroll cost is one of the largest lines in most small-business P&Ls, and buyers routinely model it from headcount and wages alone. The employer-side tax rate sits on top and is knowable in advance:

• Request the seller’s current UI contribution-rate notice. It is a one-page document and the seller has it.
• Request the recent quarterly wage filings so you can see actual reported wages against the headcount you were told about.
• Ask about claims history — a spike usually has a story, and that story is often about how the business is run.
• Model the acquired rate, not the state’s new-employer rate, unless you have a specific reason to believe the experience will not follow.

The deadline people miss

Notification of a transfer must be made “by the end of the year following the calendar year in which the transfer occurred” — though the Department encourages employers to notify as soon as possible so questions can be resolved quickly.^[2] That is a generous outer limit and a poor plan. Notify at closing, while you still have the seller’s cooperation and their records to hand.

Structure changes the picture

Whether experience follows depends on what actually transferred, which is a function of deal structure and of the facts the Department looks at. Do not assume an asset purchase resets it. Confirm the treatment of your specific transaction with the Department of Labor and your CPA before you build the rate into your model — and read the employees guide for the rest of the workforce picture.

The full guide: What happens to the UI experience rating when you buy a New York business.