All posts by Wayne Rottger

The Work Opportunity Tax Credit (WOTC) has long been a valuable federal incentive designed to encourage employers to hire individuals from targeted groups who face barriers to employment. While the program is currently in a legislative hiatus, forward-looking employers should not interpret this pause as a reason to disengage. In fact, maintaining WOTC screening practices now positions organizations to capture significant tax credits if and when the program is reauthorized. WOTC is a federal tax credit available to employers who hire individuals from specific target groups, such as veterans, long-term unemployed individuals, SNAP recipients, and others. Depending on the category and tenure of the employee, credits can range from hundreds to several thousand dollars per qualified hire. Retroactive WOTC Eligibility Historically, when WOTC lapsed and later reinstated, Congress applied retroactive eligibility, allowing employers to claim credits for hires made during the hiatus period, provided proper documentation and screening were completed at the time of hire. The key principle here is documentation timing. WOTC eligibility hinges on completing prescreening (IRS Form 8850) on or before the day of the job offer and submitting it within required timeframes once the program is active. Why Employers Should Screen for WOTC During the Hiatus If employers stop screening now, they risk: Losing retroactive eligibility for hires made during the hiatus Missing out on potentially substantial tax credits Creating compliance gaps that cannot be corrected after the fact Conversely, employers who continue screening: Preserve eligibility for retroactive credits Maintain consistent hiring workflows Avoid operational disruption when the program resumes Given the historical pattern of WOTC reinstatement, continuing screening is a low-risk, high-upside strategy. To ensure compliance and maximize potential credits, employers should adhere to the following best practices: Integrate Screening into the Hiring Workflow: WOTC prescreening should occur seamlessly during the application or onboarding process, ideally embedded within your ATS or HRIS system. This is critical to maintaining an efficient process within your organization.  Ensure Timely Completion of IRS Form 8850: The form must be completed no later than the date of the job offer. Late completion invalidates eligibility and there are no do-overs. Once the document is late, employers have no further rights.  Maintain Consistent Candidate Experience: Screen all applicants uniformly to avoid bias or compliance risks. WOTC screening should be standardized and nondiscriminatory. This will ensure clean audit results, should your organization be audited.  Retain Documentation Rigorously: Proper recordkeeping is critical, especially during a hiatus period when submission timelines may shift upon program reauthorization. Once again, this is beneficial if your organization is under audit. Monitor Legislative Updates: Stay informed on WOTC status changes so submissions can be made promptly when the program resumes. Our website publishes updates as soon as they are made available. While the concept of WOTC is straightforward, execution is not. Employers often underestimate the administrative burden involved: Managing time-sensitive forms and deadlines Tracking eligibility across multiple target groups Navigating varying state workforce agency requirements Handling documentation audits and compliance reviews Monitoring legislative changes and submission windows For organizations with high hiring volumes or even moderate decentralized hiring, this can quickly become resource-intensive and error-prone.  The WOTC hiatus is not a pause in opportunity, it’s a test of preparedness. Employers who continue disciplined screening practices now will be best positioned to capitalize on retroactive credits when the program resumes. Maintaining compliance, consistency, and operational efficiency during this period can be challenging but it doesn’t have to be. Experian Employer Services provides a comprehensive, scalable solution to manage the full WOTC lifecycle with precision and efficiency. With Experian Employer Services as your partner, you can confidently navigate the hiatus while preserving every potential dollar of tax credit available to your organization. Questions about how to best manage your WOTC process during its hiatus? Reach out to our experts:

A recent announcement by Virgin Islands Governor Albert Bryan Jr. and the Labor Commissioner, Gary Molloy, marks a significant turning point for the territory’s unemployment insurance (UI) system and could signal meaningful FUTA tax relief for employers in the near future.  For organizations with employees in the Virgin Islands, this development deserves close attention as it may directly impact federal unemployment tax exposure after more than a decade of elevated costs. FUTA Costs Add Up Under the Federal Unemployment Tax Act (FUTA), employers are subject to a standard 6.0% federal unemployment tax rate on the first $7,000 of wages per employee. Most employers, however, qualify for a 5.4% credit for contributions paid into a state or territorial UI system, resulting in an effective FUTA rate of 0.6%.  When a state or territory borrows from the federal government via Title XII advances, and does not repay those loans within the required timeframe, the FUTA credit is reduced. These credit reductions begin at 0.3% and increase annually, for each year the loan remains outstanding. Over time, this can significantly increase employer costs. In long-term borrowing jurisdictions, FUTA rates can rise well above 3.0% and in extreme cases, exceed 5.0% per employee.  The Virgin Islands has been one of the most impacted jurisdictions in the country, carrying outstanding federal UI loans since approximately 2010. As a result, employers in the territory have faced continuous FUTA credit reductions for more than 15 years. Virgin Islands FUTA Rates During this period, credit reduction rates escalated annually, creating a compounding cost burden for employers. In recent years, the Virgin Islands reached among the highest FUTA effective rates nationwide, materially increasing per-employee federal unemployment tax liability compared to the standard 0.6% rate most employers expect.  For multi-state employers or those less familiar with territorial UI dynamics, this has been an important and often costly exception to typical FUTA assumptions. On March 30, 2026, Government House announced that the Virgin Islands’ Unemployment Insurance Trust Fund is now back in the black for the first time in over 15 years.  This milestone reflects a substantial financial turnaround.  After peaking at nearly $100 million in federal loan debt, the territory has made consistent progress toward repayment and now reports a positive trust fund balance. This indicates that the Virgin Islands is at full repayment of its federal advances.  From a compliance and tax perspective, this is a critical inflection point. Although FUTA credit reductions are determined annually by the U.S. Department of Labor and will still apply for the current tax year, this development positions employers for potential relief in upcoming years.  FUTA credit reductions are directly tied to outstanding federal loan balances. Once those loans are fully repaid and remain repaid through the applicable measurement period, the jurisdiction can begin to exit credit reduction status. The Virgin Islands’ return to solvency strongly suggests that this process is underway. Employers may begin to see incremental reductions in FUTA rates as early as the next certification cycle, depending on federal determinations. Over time, this could bring rates back in line with the standard 0.6% effective FUTA rate, significantly lowering per-employee costs. Incoming FUTA Tax Relief for Virgin Islands Employers For the past decade, employers have had to account for annually increasing FUTA costs in the Virgin Islands. A solvent trust fund reduces uncertainty and supports more stable tax forecasting moving forward.  A positive trust fund balance indicates improved program health and lowers the likelihood of future federal borrowing. This reduces the risk of re-entering a cycle of credit reductions, which can be particularly disruptive for long-term workforce planning.  For employers operating in the Virgin Islands, this announcement represents a meaningful and positive shift after years of elevated federal unemployment tax costs. While no immediate changes to FUTA rates have been announced, the territory’s restored solvency is a foundational step toward eliminating credit reductions and reducing employer tax liability.  We recommend that employers continue to monitor federal FUTA certification updates later this year, evaluate potential tax savings scenarios for 2026 and beyond and coordinate with their tax or TPA partners to adjust forecasting assumptions as more guidance becomes available. In short, while the impact will not be immediate, the trajectory is clearly favorable. Employers should view this development as an early indicator of future FUTA relief and a more stable UI tax environment in the Virgin Islands.  We will continue to monitor this situation and provide updates as they occur.

WOTC renewal is a hot topic leading up to its expiration. Learn about potential legislative solutions and how to prepare for the potential of retroactive credits.

It's officially a new year, but that doesn't mean 2025 ended without some lingering effects. Employers face an evolving regulatory environment shaped by immigration reform, AI legislation, unemployment tax adjustments, and the uncertain fate of key programs like the Work Opportunity Tax Credit (WOTC). In this blog post, we distill the most important takeaways from Experian Employer Services’ latest quarterly webinar, covering what HR, tax, and compliance teams need to know now to prepare for the rest of 2026. While Congress has been historically inactive in 2025—passing only 36 bills—the federal regulatory machine never stopped. In Experian Employer Services’ November webinar, “Quarterly Regulatory & Legislative Updates for Employers (Q4),” experts Gordon Middleton and Wayne Rottger broke down the compliance shifts that will shape the road ahead. Missed the live event? You can access the on-demand recording of Quarterly Regulatory & Legislative Updates (Q4) to hear directly from our compliance experts. This 60-minute session offers in-depth coverage of urgent topics including IRS withholding changes, state unemployment tax trends, and federal immigration enforcement. Watch now. Congressional Inactivity Doesn’t Mean Employer Invisibility Although Congress passed fewer bills than any time in modern history, executive action and federal agencies filled the gap. The president issued over 210 executive orders in 2025, and federal agencies like USCIS and DHS continued rapid-fire regulatory activity. Among the biggest changes: H-1B Visa Petitions: A controversial $100,000 petition fee for some H-1B applications was introduced in September and clarified in October. This policy is being challenged by the U.S. Chamber of Commerce and others. EAD Auto Extensions: Effective October 30, 2025, DHS eliminated auto extensions for many Employment Authorization Document (EAD) categories—including asylum applicants, TPS holders, and refugees. E-Verify Enforcement: E-Verify operations remained active through the government shutdown, a signal that immigration vetting remains a priority. Employers were reminded to submit cases timely and document any delays. One Big Beautiful Bill Act (OBBBA): Big Withholding Changes Ahead The OBBBA continues to reshape how payroll and HR teams handle tipped employees: Tip Tracking: Employers must now identify “qualified tips” tied to specific occupations using Treasury-issued codes (nearly 70 new codes were released). 2026 W-2 Draft Changes: A new Box 14B will be introduced for these occupation codes, and Box 12 will include new reporting fields. Also expect a 15-line worksheet on the 2026 W-4 draft, which expands deductions. Employer Limitation: Employers can’t force employees to adopt the new W-4, so communication strategies must be prepared in advance. Shutdowns and Backlogs: IRS and SSA Still Expect Timely Compliance Despite mass furloughs at the IRS and other federal agencies, deadlines remain intact. Automated notices are still being sent, payments are due, and limited live support is available. SSA, DHS, and ICE continued operating at high capacity during the shutdown. State-Level Legislation: The Real Compliance Movers States continued to pass meaningful reforms while the federal government stalled. Highlights include: AI Restrictions: Illinois now prohibits AI in hiring if it leads to discriminatory outcomes. Wage Theft Notices: Rhode Island’s new hire notice requirement starts January 1, 2026. Pay Transparency: Massachusetts will require employers with 25+ employees to publish pay ranges starting October 2026. Paid Leave Expansions: Nebraska mandated new minimums for employers with as few as 11 employees. Unemployment Legislation: A Rising Risk for Employers 2025 saw 188 unemployment-related bills, with many focusing on expanding access to benefits—even to striking workers. Washington and Oregon passed laws granting UI benefits during trade disputes, raising red flags about future trust fund stability. Key takeaways: Trust Fund Risk: Most state UI trust funds are underfunded. Large-scale strikes could significantly drain them. FUTA Credit Reduction: California and the U.S. Virgin Islands are likely to face FUTA reductions in 2026. California alone owes $21 billion in federal UI loans. Taxable Wage Base Increases: Half of U.S. states are increasing UI taxable wage bases in 2026, affecting employer payroll budgets. WOTC Renewal: Hopeful, But Not Done Yet The Work Opportunity Tax Credit (WOTC) expired December 31, 2025. Although it has historically been renewed retroactively, no bill has yet been introduced. Industry advocates report promising signs, but employers are advised to continue processing applications to remain retroactively compliant if renewal occurs. Final Key Takeaways Compliance Doesn’t Pause—even during a shutdown. Deadlines remain active. Prepare for OBBA Impact—new W-4 and W-2 formats will require payroll system updates. State Legislation Will Continue—watch for wage theft, pay transparency, and AI usage laws. UI Tax Changes Are Coming—plan for higher taxable wage bases and future trust fund pressures. WOTC Renewal Uncertain—continue screening and tracking candidates until further notice. Use a Trusted Compliance Partner—keeping up with regulatory changes is more than a full-time job. Stay informed year-round with the Experian Employer Services Blog. Subscribe for updates on legislative changes, compliance tools, and insights from our subject matter experts.

Having spent decades working with unemployment programs across the country—from state agencies to employer groups to TPAs—I’ve seen many changes in how states administer unemployment claims. Some changes feel routine. Others signal a shift toward modernization. New Jersey’s recent passage of S.2357 falls into the second category. The law is designed to improve communication between employers and the New Jersey Department of Labor (NJDOL) by ensuring the state receives separation details sooner and more consistently. Recently, the Association of Unemployment Tax Organizations (AUTO) asked NJDOL to clarify several operational questions. The department’s written responses finally give employers a clearer picture of what to expect as the state moves forward with implementation. Below is a practical, easy-to-digest summary of what New Jersey employers should know. 1. The Heart of S.2357: Two Options for Employers NJDOL has confirmed that employers have two ways to meet the new requirement. Employers do not have to do both—just one. You must either: Option 1 — Respond to the UI claim notice within 7 days, or Option 2 — Provide the separation information in the employer portal within 7 days of separation. Either option satisfies the requirement on its own. Submitting the separation information at the time of separation is preferred because it gives the agency a head start and often leads to quicker, more accurate determinations. However, NJDOL emphasized that this is not mandatory.  If an employer simply responds to the initial claim notice within the 7-day timeframe, the requirement is considered met. This clarification should bring relief to many employers who feared the law imposed two separate, and potentially duplicative, steps. 2. About That $500 Penalty… You may have heard S.2357 includes a $500 penalty for failing to provide separation information. Here’s what NJDOL shared: The penalty remains part of the statute. NJDOL is not enforcing it at this time. The agency wants to give employers time to adjust to the new system. Enforcement could begin at a later date once the system is fully operational. In short, the penalty exists, but employers should focus on learning the process rather than worrying about fines right now. 3. Employer Access (EA) Portal Registration: The First Step To participate in the new reporting process, employers must activate their Employer Access (EA) account within the MyNewJersey system. NJDOL clarified the following: Employers need a unique authorization code to register. These codes were mailed to employers in July 2024. A follow-up statewide mailing is planned for January 2026 for employers who didn’t receive or misplaced their code. Employers must register before a TPA can link to their account. After the employer registers, the TPA can request access using the employer’s EIN and authorization code. The employer then approves (or denies) the request via email. Registration is truly the gateway to everything else. Without it, employers and TPAs cannot begin using the new separation reporting system. 4. Submitting Separation Details Early: How NJDOL Uses the Data Many employers asked how the state will handle separation information submitted before a former employee files a UI claim. NJDOL shared the following helpful process: Early separation details will be stored in the system but not acted upon immediately. The system will crossmatch this information daily against new UI claims. When a match occurs, the claimant will receive a fact-finding questionnaire that includes the employer’s earlier statement. If the employee never files for benefits, nothing is sent to the individual—and the information simply remains on record. This optional early submission can improve accuracy and reduce back-and-forth between employers, claimants, and the agency. 5. Practical Advice Moving Forward Based on NJDOL's responses, here’s what I would advise employers right now: Register your EA account as soon as you have your authorization code—this unlocks everything. Choose the approach that best fits your workflow: respond to the claim within 7 days OR post the separation at the time of separation. Don’t stress about penalties right now but do build good habits early. Stay in communication with your TPA so responsibilities are clear and aligned. Expect further refinement, as with any modernization effort, changes may continue as the system evolves. New Jersey’s intent is not to burden employers but to create a more consistent and efficient UI process. With clear expectations and the ability to choose the method that works best for your organization, compliance should feel manageable—not overwhelming. Experian Employer Services will continue to provide updates and best practices as available.

Explore the 2026 unemployment tax changes and learn what’s new from 2025. Get insights on wage bases, rate schedules, and strategies to manage UI costs effectively.

An update on FUTA Credit Reductions may affect the unemployment tax owed by employers doing business in certain key states.

Unemployment fraud is rising again. Learn how HR and payroll teams can minimize risk to protect their employees and UI tax rates.

Understand termination letter and separation notice requirements for each applicable U.S. state with this helpful guide to stay compliant.

Train managers to handle terminations and unemployment claims the right way with expert tips on compliance, documentation, and reducing employer risk.

Learn why the USDOL's Unemployment Trust Fund Solvency Report has important implications for employer taxes in certain states.

Employers in California, Connecticut and New York should be aware of how a Benefit Cost Rate could increase their FUTA Tax for 2025.

President Biden declared a major disaster in California due to wildfires, a crucial step in providing much-needed federal assistance to support local recovery efforts.

FUTA Credit Reductions can eliminate an employer's 5.4% FUTA tax rate credit if your state has an outstanding trust fund balance.

The Kansas Department of Labor (KSDOL), Division of Unemployment Insurance recently posted a notification on its site informing employers of an upcoming technology enhancement. The current Employer Services portal will be made unavailable starting Wednesday, November 13, 2024, at 5 pm central time.  It will reopen Tuesday, November 19, 2024, at 8 am central time. The Kansas Unemployment Insurance Technology Enhancement Project The Unemployment Insurance Technology Enhancement (UITE) project is a multi-year initiative which focuses on delivering a transformational unemployment insurance experience to businesses and workers of Kansas. In a press release, Governor Laura Kelly stated that access to unemployment benefits has depended on an outdated computer system that caused problems during the Great Recession and pandemic for residents. The purpose of the enhancement project is to provide a more seamless experience to Kansas employers and the workforce. The new system is intended to provide a number of improvements: Streamlining operations through improved workflow efficiency and adaptability, data management, and collaborations with other agencies; Enhancing user experience through adoption of advanced customer relationship[ management systems and personalized communication channels, more self-service options, and improved mobile-friendly access for claimants; and Upgrading data security and compliance with enhanced cybersecurity measures to safeguard data and ensure regulatory compliance. IMPORTANT INFORMATION FOR EMPLOYERS On November 19, 2024, there will be a new online account setup functionality available to employers. All active employers are required to establish a username and password to access the new portal.  If you had login credentials in the prior portal, they can be reused in the new. They will not automatically be carried forward, however.  Employers will maintain their current state unemployment insurance account number, but going forward, it will be in a 10-digit format, with on zero (0) at the beginning and three zeroes (000) at the end.  Even if an employer works with a Third-Party Administrator (TPA), KS DOL recommends establishing an online account. This will ensure constant access to correspondence or account information.  Employers may have multiple authorized users as part of the Unemployment Services for Employers set up process. The timeline below was included in the announcement on the KS DOL, Division of Unemployment Insurance site. It represents an overview of the transition and when to expect an impact on workflow. Please make certain any staff who currently utilizes the state’s portal is aware of these changes and that new usernames are established on the appropriate timeframe. For additional information about this change, please visit the KSDOL site. 

Wayne Rottger recaps the biggest issues concerning unemployment insurance covered at this year's NASWA's Annual Summit.

Following a disaster, there are employer next steps to best manage federal aid including disaster unemployment assistance.

As a business owner, you know the federal unemployment tax rate affects costs. Learn how we can help you navigate your unemployment management needs.