Effective January 1, 2025, Ohio regulations simplify state unemployment insurance (SUI) reporting and tax payments for employers with employees who work concurrently for more than one related employer. (Ohio Administrative Code 4141-11-13; Ohio Department of Job & Family Services website.)

Under the prior rules, Ohio, like most other states, required that SUI be reported and paid by the entity that had direction and control over the employee. Consequently, when an employee worked concurrently for more than one related employer, SUI had to be reported and paid by all employers having direction and control of the employee. This process increased the reporting burden for related employers and created the complexity of having more than one SUI tax rate for an employee.

Now, under the new Ohio regulations, by designating a primary account, businesses need only file one SUI return and apply one SUI tax rate for employees concurrently employed by related employers, similar to (but less complex than) the federal common paymaster rule that is currently available for federal Forms 940, 941 and W-2 purposes.

How the rule works

Eligible employees/employers

The rule applies only to individuals who work concurrently for at least two substantially commonly owned, managed or controlled employers during the same time period. The regulations do not elaborate on what is meant by "substantially" owned, managed or controlled.

The regulations make clear that employers may qualify for the rule by reorganizing their structure to transfer employees to a commonly owned, managed or controlled employer.

Establishing a primary account for concurrently employed individuals

To report employees under one primary SUI account, a Transfer of Business form must be completed and filed with the Ohio Department of Job and Family Services (Department), which identifies the concurrent employers and whether employees will be reported on the primary account due to concurrent employment or transfer. The Department may require additional information before granting approval.

The newly approved primary account is effective on the date assigned by the Department and remains in effect for at least two calendar years and continues to remain active unless the employer provides electronic notice of termination of the primary account.

Shared liability of employers

While only the primary account is responsible for filing the SUI returns and paying SUI contributions for concurrently employed individuals, separate tax accounts of each employer must be maintained. Employers maintaining the secondary accounts and the employer maintaining the primary account are jointly and severally liable for any unpaid SUI contributions due from the primary account.

Ernst & Young LLP insights

Ohio's adoption of a common paymaster option for SUI purposes gives employers a unique opportunity to better streamline SUI reporting and manage costs. Keep in mind, however, that proper planning is essential before designating a primary SUI account or restructuring for this purpose. For this reason, consider seeking assistance from your employment tax advisor.