EmploymentQuestion 976 of 1605
How can a contractor's history of layoffs and UI claims affect its business over time?
a.It has no effect on anything
b.Through 'experience rating,' a higher number of UI claims charged to the employer can increase its UI tax rate
c.It lowers the federal minimum wage owed
d.It increases the number of allowed work hours
Explanation
California's UI system uses 'experience rating': an employer's UI tax rate reflects its history of unemployment claims charged against its account. More layoffs leading to more benefit charges can raise the employer's UI contribution rate, while a stable workforce can keep it lower. This creates a financial incentive to manage layoffs and to contest fraudulent claims, but it never changes minimum wage or maximum-hours rules.
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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)