The Pennsylvania Department of Labor and Industry recently announced that all employers in the Commonwealth will be required to pay their share of unemployment compensation taxes online.  The new rule takes effect January 1, 2017 and aims to reduce paperwork while streamlining the payment process.  The time for making these electronic payments will depend on whether an employer is considered “contributory” or “reimbursable” under the Unemployment Compensation Law.

Private, for-profit entities are contributory employers and pay unemployment taxes based on a contribution rate and their taxable wage base.  For these employers, the electronic payment requirement begins with the first calendar quarter filing period in 2017.

Political subdivisions and some nonprofit organizations may qualify as a reimbursable employer under the Law.  Reimbursable employers pay back the Unemployment Compensation Fund for the amount of unemployment benefits charged to their account.  These entities are billed either monthly or quarterly and must begin using the electronic payment system with the first 2017 benefit charge period.

Of course, the new rule comes with a set of teeth to encourage participation.  Failure to comply with the electronic payment requirement may result in a penalty of 10% of the payment up to a maximum of $500.00 per occurrence.  The minimum penalty for noncompliance is $25.00 per occurrence.

Employers that are unable to comply with the electronic payment requirement can submit a request for a waiver.  The Department will review each request and issue determinations on a case-by-case basis.  Waiver request forms are available  online.

The electronic payment process will be managed through the Unemployment Compensation Management System, which can be accessed here.  The site also contains useful information about how to register for and make electronic payments.