Unemployment insurance is a safety net for workers who lose their jobs through no fault of their own. Employers fund the system through taxes, and in Texas, those funds go into a state trust managed by the U.S. Treasury. From there, benefits are paid to qualifying workers while they search for new jobs.

Elsa Ramos likens it to car insurance: you hope you never have to use it, but when something happens, it’s there. As an employer, you’re essentially paying into a system that protects the workforce and the economy during periods of job loss. Just as car insurance premiums are influenced by a driver’s history, an employer’s UI tax rate is affected by their history of layoffs and UI claims. Employers with higher turnover or more frequent layoffs may see higher tax rates, while those with stable employment histories may benefit from lower rates. This comparison underscores the importance for employers to manage their workforce effectively and understand how employment decisions can impact their UI tax liabilities. 

Why It Matters to Small Businesses

Many small employers may not realize that how they manage employee separations can directly affect their UI tax rates. If a former employee files for unemployment and it’s determined they’re eligible for benefits, that cost is typically charged back to the employer’s account. Over time, frequent claims can drive up your tax rate.

The key takeaway? Understanding the rules around unemployment claims and how to respond to them is essential. It can impact your tax liability and your overall business expenses.

TWC Is Here to Help

Throughout the episode, Ramos stresses that the TWC is not just an enforcement agency—it’s also a support system. Small businesses don’t have to navigate these rules alone. TWC provides resources, training, and guidance for employers who want to better understand their responsibilities and protect their businesses.

Whether you need help responding to a claim, want to attend an employer seminar, or simply have a question, TWC is a phone call or click away. Their goal is to help employers like you succeed and stay compliant.

Final Thoughts

Unemployment insurance might seem like just another line item in your budget, but it’s a vital part of supporting a healthy workforce—and smart management of it can protect your business. This episode is a great listen for business owners who want to stay ahead of the curve, avoid common pitfalls, and better understand how state policies affect their day-to-day operations.

If you’ve ever had questions about how unemployment insurance works—or how it affects you—this conversation is a must-listen. And remember: you’re not alone. The Texas Workforce Commission is your partner in building a stronger business and a stronger Texas.

This episode of “Another Week of Available Work” provides valuable insights into the intricacies of unemployment insurance taxes in Texas. By understanding the components of UI taxes and their implications, employers can make informed decisions that support their business operations and compliance efforts.​

For more detailed information, listen to the full episode here: Another Week of Available Work – Unemployment Insurance: A Survival Guide with Elsa Ramos