Alabama Department of Labor

2006 Unemployment Insurance Rate Schedule is Lowered

Alabama employers are no longer paying the highest unemployment insurance rate allowed under state law. As of January 1, 2006, the rate schedule has declined from “Schedule D” in 2005, to “Schedule C.” The money collected is deposited into the Unemployment Compensation Trust Fund, which is used to pay unemployment insurance benefits for qualified Alabamians.

“I am pleased we were able to have a rate schedule decrease for 2006,” says Phyllis Kennedy, director of the Alabama Department of Labor. “With a growth of more than $97 million in the Unemployment Compensation Trust Fund over the past year, employers are paying less into the fund. This is a way that every Alabama employer can share the benefits of a vibrant economy and the lowest jobless figures ever recorded in Alabama.”

The 2006 minimum rate is a total of .60 percent on the first $8,000 of wages earned by each employee. Approximately 54 percent of all experienced rated Alabama employers are assigned the minimum rate. The maximum rate is 6.2 percent. New employers will continue to pay the entry rate of 2.7 percent. The first payments under “Schedule C” are due at the end of the first quarter of 2006.

Each year on June 30 the experience rating provisions of the law requires us to look at the balance in the Trust Fund and to determine the appropriate rate schedule for the following calendar year. The purpose of the schedules is to assist in the recovery of benefit costs so that the Trust Fund neither is depleted nor collects excessive revenue. Ascending rate schedules were established, along with the revisions in the Unemployment Compensation law, in the 1989 Regular Session of the Alabama Legislature.

For further information on the Alabama Unemployment Compensation System and the rate schedule, you may contact the Unemployment Compensation Tax Section at (334) 242-8467.