In a crew labor burden, the Minnesota unemployment cost is the unemployment insurance your company pays on its own crew payroll. Estimators who build a crew labor burden need that cost as one line, and owners who review a bid need to know whether the line is right. A small error in the rate shows up on every hour the crew works, so it is worth checking every time.
Key takeaways
- Carry the experience rate to two decimal places, and cap it at 8.90 percent.
- Keep the federal FUTA share on its own row at 6 percent of FUTA wages.
- Check the 25 percent ownership test for any business you buy or take over.
- Mark the 30 calendar days from the date of acquisition for the electronic notice.
- Write down the source and the date for each figure.
The four figures below are the ones to check first. Three come from the Minnesota statute on employer experience rating, and one comes from the federal FUTA rate that sits alongside it. Read the sources yourself before you price a job, and confirm current figures against your own state rate notice. For a wider set of payroll rules, see employer payroll tax rules. This is a checklist for the burden line, not tax advice.
What the burden line is measuring
A crew labor burden is a percentage added to base wages so the price covers costs that the hourly wage does not. Payroll-related costs are the usual example. The unemployment share is one piece of that percentage, and it is the piece that varies most from one employer to the next. Two companies with the same crew, the same wages, and the same job can carry different unemployment costs, because the state rates each employer on its own experience.
That is why an industry average is a poor stand-in for your own line. An average can help you sanity-check a number, but the figure that belongs in the burden is the one that applies to your account. If you do not have a current rate notice in hand, get one before you finalize the line for a bid.
It also helps to separate the parts of the line. Keep the state experience share, the federal share, and any other payroll item on their own rows. When a number looks wrong later, separate rows make it much faster to find the source of the error. A single lump percentage hides the reason it moved.
The experience rate and its ceiling
Minnesota's experience rating for an employer is governed by Minn. Stat. § 268.051. The statute says the experience rating is computed to the nearest one-hundredth of a percent, to a maximum of 8.90 percent. Two things follow for the burden line.
First, carry the rate to two decimal places. Rounding it to a whole percent can move the line by a noticeable amount on a large payroll, and the statute sets the precision at the hundredth. Keep the two decimals all the way through the calculation, and round only the final total you show to the owner, if at all.
Second, treat 8.90 percent as the ceiling. If a calculation or an older estimate gives you a higher number, the statute's maximum is the figure to use, not the estimate. An estimator who sees a number above the ceiling should assume the input is wrong before assuming the rule is wrong, and should go back to the rate notice to find the mistake.
Estimators often reuse a rate from a previous job. That habit is fine for a quick bid, but it is the first thing to refresh when the job is larger, when the bid goes out after a change in the company, or when the owner has changed. Pull the current rate and write down the date you pulled it, so the owner reviewing the bid can see where the number came from.
Four figures at a glance
The four figures are the 8.90 percent ceiling, the 25 percent ownership test, the 30-day notice window, and the 6 percent federal FUTA rate. The hundredth-of-a-percent precision rule sits with them because it governs how the first figure is carried. The table puts each rule beside its source, so you can compare them before you build the line.
Read the table as a checklist. Each row is a figure you can confirm on its own. If you cannot find the figure on the linked page, do not fill it in from memory; go back to the source or to the current rate notice.
Common ownership and successor businesses
Section 268.051 compares a predecessor and a successor business using a test built on ownership and control. The statute's wording is "there is 25 percent or more common ownership or there is substantially common management or control between the predecessor and successor." The test is written with "or," so meeting either branch is enough to trigger the question. The first branch is a numeric threshold on ownership. The second is a judgment about whether the same people run both businesses in practice.
For a crew, this matters in a few common situations. A company may buy another company's crew, take over a contract with the same workers, or be formed by the owners of a business that is winding down. In each case the two businesses may be linked under the test, even if the paperwork looks like a clean start. Owners should ask the question before the bid goes out, not after the crew has started work.
An estimator who prices a job with a fresh rate, when the statute treats the business as a successor, may be using the wrong figure. The safe approach is to ask for the ownership history of any company you are buying from or taking over, and to ask who will manage the crew after the change. Write the answers down. If the answers are unclear, ask the owner to confirm them before the rate goes into the burden.
The 25 percent figure is a threshold, not a complete rule. The statute sets out what follows once a successor is identified, and that consequence is outside this summary. Read the full section, or ask the state for guidance, before you assume how a linked business is rated.
The 30-day notice after an acquisition
The statute also sets a deadline for successors. It says: "Each successor employer must notify the commissioner of the acquisition by electronic transmission, in a format prescribed by the commissioner, within 30 calendar days of the date of acquisition." The source is the same Minn. Stat. § 268.051.
Three details matter when you put this on a calendar.
The clock starts on the date of acquisition. If the closing date and the start of crew work fall on different days, confirm which date the statute treats as the date of acquisition before you set the deadline. The later start of work does not move the window.
The days are calendar days. Weekends and holidays count toward the 30. An estimator or owner who plans around business days will miss the window without noticing.
The notice goes by electronic transmission, in the format the commissioner prescribes. This post does not describe that format, so check the state's current instructions for it. Keep a copy of the filed notice with the acquisition file, because the burden line for the acquired crew should rest on a documented filing.
Owners reviewing the burden line should ask whether the notice has been filed. A burden that uses the rate of the predecessor, or a rate that ignores a linked business, is only as good as the filings behind it. For more on the timing, see Minnesota unemployment tax deadline windows.
Rounding and exceptions that change the line
Three rules in section 268.051 can change how you use the figures, and each one is easy to miss when you work from a spreadsheet.
Rounding. The statute says: "Computations under paragraph (a) are not subject to the rounding requirement of section 268.034." That sentence is in the same section. It means some computations are carved out of the general rounding rule in section 268.034. Before you round anything that comes from the statute, look up paragraph (a) and see which computation it covers. Do not apply a single rounding habit to every figure in the line, because the habit may be wrong for the computations the statute excludes.
Benefits excluded from rating. The statute covers benefits that do not count toward the rating. It refers to cases where "the unemployment benefits paid have been determined not to be used in computing the employer's experience rating under section 268.047, subdivision 2 or 3." In plain terms, some benefits paid on an account are determined not to count in the experience calculation. When you review a rate notice and the benefit charges look high, check whether any charges are marked as not used in the rating. A high charge that is excluded should not be treated as a reason to raise the burden line.
Reimbursing employers. The statute names "the state of Minnesota and political subdivisions that make reimbursements, unless they elect to pay taxes as provided in section 268.052." That clause points to a different path for reimbursing employers, including governments that choose how they pay. If your own company is a reimbursing employer, or you are not sure whether it falls in this group, read section 268.052 before you use the standard line. Do not assume the standard line applies to every employer in the state.
These three exceptions are the reason a burden line built from one rule of thumb tends to drift. Check each exception against the source when you build the line, and write down which one applied, so the owner can see that the check was made.
The federal FUTA share
The federal share is separate from Minnesota's state rate. The IRS says: "The FUTA tax is 6% of your employee's FUTA wages." The IRS page is written for household employers and states the 6% rate for their employees' FUTA wages, so confirm the rate that applies to your payroll against current IRS guidance.
Keep the federal share as its own row. Merging it with the state experience rate makes the line harder to check, and it makes it harder to see which figure changed when a bid is revised. A separate row also makes the FUTA check simple: the rate is 6 percent of FUTA wages, and the question is which wages count. For the other federal payroll line, see employer FICA rates to add to labor burden.
The quoted page does not cover the FUTA wage base, and it does not explain how the federal and state pieces interact in your situation. Do not assume those details from this post. Check current IRS guidance for the wage base and any adjustments that apply to your payroll before you finalize the federal row.
Owners should also see the federal row labeled as federal. A reviewer who sees a single unemployment percentage cannot tell whether the state rate was applied correctly, and a labeled federal row gives the reviewer something specific to confirm.
A checklist for the burden line
Use this list each time you build or review a crew labor burden. Each item points back to a figure or rule above.
- Experience rate. Confirm the current rate from your rate notice, carry it to the hundredth of a percent, and cap it at the 8.90 percent maximum.
- Rounding. Check paragraph (a) of section 268.051 before rounding any statute-based computation.
- Benefit charges. If a rate notice shows charges that look too high, check whether any are marked as not used in the experience rating.
- Ownership. Compare the predecessor and successor businesses against the 25 percent ownership test and the management test. Document the answer.
- Acquisition notice. If you took over a business, mark the 30-calendar-day window from the date of acquisition and confirm the electronic notice was filed in the prescribed format.
- Reimbursing status. Confirm whether your company is a reimbursing employer, and if it is, read section 268.052 before using the standard line.
- Federal row. Carry FUTA as a separate line at 6 percent of FUTA wages, and confirm the wage base with current IRS guidance.
- Source and date. Write down where each figure came from and the date you checked it.
Illustrative example: one burden line
An estimator has a rate notice showing an experience rate of 8.90 percent, the statute's ceiling. She carries it to two decimal places and keeps it on its own row, then adds the federal FUTA rate of 6 percent on a separate row. Later, the owner asks whether an acquired crew changes the line. The estimator checks the 25 percent ownership test. If the businesses are linked, she marks the 30 calendar days from the date of acquisition on the calendar and asks for the filed notice before the bid goes out.
How to present the line to an owner
An owner reviewing a bid wants to know two things: whether the number is right, and whether anyone checked it. The checklist answers both if you keep it with the estimate. A short note beside each figure, with the source and the date, is usually enough. The note should say where the rate came from, whether the ownership test was checked, whether an acquisition notice applies, and which federal figure was used.
When the owner asks why a line is higher or lower than the last bid, the separate rows help. You can point to the state rate that changed, or to the federal row that stayed the same, and the conversation stays on the facts. Without separate rows, the discussion tends to turn into guessing about where the difference came from.
If a figure is missing or unclear, say so in the note. A line marked "rate pending confirmation" is more useful to an owner than a clean-looking number that nobody can trace. Owners can decide whether to wait for the confirmation or to price the risk, but they can only make that decision if the gap is visible.
Keep the check simple
The state's jobless rate tells you about the labor market. Your burden line tells you what your own crew costs to employ, and that depends on your experience rate, your ownership history, your acquisition filings, and your federal payroll rate. Those four things change far less often than the headlines, and they are the things to check before you price a crew.
Start with the rate notice, carry the figures carefully, and keep the sources next to the numbers. Revisit the line when the payroll changes, when the ownership changes, or when a business is bought or taken over. That routine will catch most errors before they reach a bid.
Your next step today
Pull your current state rate notice, copy the experience rate to two decimal places, and write its date beside the figure on the bid you are preparing.
Related guides: Construction unemployment tax: 5 figures for bid estimates · Minnesota best value cap: 20 percent or one project.
Frequently asked questions
What is the Minnesota unemployment cost in a crew labor burden?
It is the unemployment insurance cost your company pays on its own crew payroll, and it belongs on its own line of the burden.
What is the highest experience rate to use?
The statute sets a maximum of 8.90 percent, so treat that figure as the ceiling. If a calculation gives you a higher number, check the input before you assume the rule is wrong.
When must a successor employer give notice?
A successor employer must notify the commissioner of the acquisition by electronic transmission, in the prescribed format, within 30 calendar days of the date of acquisition.