South Dakota Department of Labor has made a formal announcement about a surcharge of 1.5% of taxable payroll in 4th quarter 2009 payable in January 2010.  Using 2008 taxable wage data as a basis for making an estimate, it looks like employers could be footing the bill for an additional $4 million for 4th quarter 2009 alone.  The surcharge was triggered by the low unemployment insurance trust fund balance at the end of the 3rd quarter of 2009.  The Department of Labor is expecting the surcharge will continue through the 2nd quarter 2010. 

The bad news is that the surcharge payments are not credited to the employer’s state account for purposes of determining experience rating which ultimately impacts the employer’s unemployment tax rate.  This is an on top charge which is a great example of the fact that the employer doesn't just pay for charges of their own employees, they pay for the charges of others as well.  It is a general estimate that on average, employers will pay $1.50 for every dollar charged to their account.  In South Dakota, the average is about $1.70.

Tammy Mullin