West Virginia Governor Patrick Morrisey approved Senate Bill 1053, which, effective July 1, 2026, establishes a temporary state unemployment insurance (SUI) automation and administrative fee of 7% that is offset with a corresponding reduction in the employer's experience-based SUI tax rate.

Automation and administrative fee mechanics

Under S.B. 1053, all contributory employers, except those with a zero experience-rated SUI tax rate, will be required to pay a new annual unemployment automation and administration fee equal to 7% of total taxable wages for the prior 12-month period ending the preceding June 30. A corresponding credit is applied to the employer's experience rate; however, the credit may not bring the SUI tax rate below zero.

Revenue from the surcharge will be deposited into a new Unemployment Automation and Administration Fund to support modernization of the state's unemployment system, administrative operations, and workforce development initiatives, subject to an annual collection cap of $18 million. The Commissioner of WorkForce West Virginia may reduce that percentage to ensure total fee collections do not exceed $18 million annually. The surcharge will expire once total collections reach $60 million, or on July 1, 2031, whichever occurs first.

Employers will be notified of the surcharge amount by March 31 each year.

The portion of the surcharge directed to the Unemployment Automation and Administration Fund is not treated as a SUI contribution for federal unemployment tax (FUTA) purposes and is not included in West Virginia contributions reported on Form 940, which may affect the calculation of the FUTA tax credit.

Ernst & Young LLP insights

Employers should confirm that payroll systems can account for both the reduced SUI tax rate and the separate surcharge obligation. Failure to properly calculate or timely remit the surcharge may increase exposure to assessments, penalties, and audit scrutiny.