SUTA dumping penalties

Employers and financial advisors engage in State Unemployment Tax Act (SUTA) dumping when they attempt to manipulate state experience rating systems in order to obtain a lower UI rate than their unemployment experience would otherwise allow.

SUTA dumping is present when a business attempts to transfer to another employer, where there is at least 10% (0.1) common ownership, management, or control of the two employers, some or all of its workforce, payroll, or both. SUTA dumping also occurs when a person who is not liable for contributions at the time they acquire a business of an employer is found to have acquired the business solely or primarily for the purpose of obtaining a lower rate.

A penalty is assessed if a violation of the statute is determined to have occurred. The penalty will be 10% (0.1) of the employer’s wages subject to contributions in the last completed payroll year, or $10,000, whichever is greater. An individual who knowingly advises another individual to violate or attempt to violate the statute is subject to a civil penalty of $10,000. In addition to these penalties, any violation of this statute constitutes a Class E felony punishable by imprisonment.

The New York State Department of Labor has developed programs and procedures to detect SUTA dumping. You may report any possible incident of SUTA dumping by contacting the Unemployment Insurance Liability and Determination, Fraud Unit, at 518-485-2144, or by calling our confidential 24-hour toll-free Fraud Hotline at 1-866-435-1499.