The Silent Killers in Construction – Part 4: State Unemployment Taxes

The majority of construction company owners I’ve met with in the past year have shared with me their ongoing frustrations of rising SUTA costs (state unemployment taxes) which have ultimately increased the cost to run their business. SUTA ironically is the only tax that businesses actually have any control over, yet sometimes it is the most neglected. Because SUTA is calculated on a 3 year running average, the consequences of downsizing your labor force one year will negatively impact your SUTA rate for the two following years.

Many small to mid-sized owners in the past couple of years have admitted that they had no idea how losing just one or two unemployment claims would negatively impact their bottom line and ultimately increase their SUTA rate. Countless owners have seen their SUTA rates nearly double since the economy went into decline. This typically results from mismanagement of unemployment claims or the lack of proper and timely follow up on the initial claim. This is understandable as most owners are not HR professionals and are usually focused on the things that make their company money, not HR issues. This is where a PEO’s team of HR professionals not only assist with handling the unemployment claim, but also follow up on the paperwork and deadlines that need to be met during the claim process. Owners who go from a “stand alone” situation to using a PEO usually see a substantial drop in their SUTA rate, which greatly helps to lower the cost of running their business.

Construction companies who partner with PEOs for help with Payroll, Workers’ Comp, HR, and Safety/Risk Management increase profitability by focusing on their core competencies which grow the bottom line. They reduce time “pushing paper”, streamline their cash flow, and share the risks and liability that goes with having employees. Ultimately, they have peace of mind knowing that one team of professionals is helping them manage the ever changing, complex, and expensive world of being an employer. For an increasing number of contractors, partnering with a PEO is simply a better way to run their business!

About M2 PEO Solutions

M2 PEO Solutions is an independent consulting firm that helps construction and blue collar companies find PEOs (“Professional Employer Organizations”) who have expertise in the labor intensive industries. We help solve employment problems for business owners in the areas of Payroll, Workers’ Comp, HR, Safety/Risk Management, and Benefits Administration.