All employees who perform service for remuneration under the direction and control of a subject employer are covered unless such service is specifically excluded from the definition of employment. (An employer may elect in writing to waive the exclusion.) Following are examples of services which are excluded from covered employment:
- Services covered under the Railroad Retirement Act;
- Service as a product demonstrator if the individual meets eight criteria as specified in TUCA and has entered into a written contract indicating, both in writing and in fact, that the individual is an independent contractor;
- Domestic service in a private home, local college club, or local chapter of a college fraternity or sorority unless the employing unit is a subject employer. (See preceding question regarding Who Is A Subject Employer?;
- Service of a minor child in the employ of his father or mother or service in the employ of the individual's son, daughter, or spouse;
- Service performed in the employ of a church or organization operated primarily for religious purposes;
- Service performed for a political subdivision as an elected official, member of a legislative body, member of the judiciary, certain employees hired on a temporary basis due to fire and similar emergencies, and certain part-time policy-making or advisory employees;
- Service performed in the employ of a foreign government or instrumentality of a foreign government;
- Service performed as a student nurse or an intern in the employ of a hospital;
- Service performed as an insurance agent or solicitor if remuneration is solely by way of commission;
- Service of newsboys under the age of 18;
- Service performed in the employ of the United States Government;
- Service performed by an ordained minister in the exercise of his ministry or by a member of a religious order in the exercise of duties required by such order;
- Services performed by an individual receiving rehabilitation of the disabled;
- Service performed as part of an unemployment work relief or work training program assisted or financed by a Federal or State agency;
- Service performed by an inmate of a custodial or penal institution, whether publicly or privately operated;
- Service performed by a student for a school, college, or university if he is enrolled and regularly attending classes;
- Certain services performed by a student who is enrolled at a nonprofit or public educational institution which combines academic instruction with work experience;
- Service performed by a patient of a hospital for the hospital;
- Service performed on a fishing vessel normally having a crew of fewer than 10 if the crew member's reimbursement for services is a share of the catch and the services are determined not to be employment under the Federal Unemployment Tax Act;
- Service performed by a sales agent if seller is engaged in the direct sale of a product, and has a written contract whereby substantially all remuneration is to be by commission;
- Service performed by a full-time student employed by an organized camp which is operated seven months or less each year. The student must be enrolled full-time at an educational institution or be between terms with a reasonable assurance that he will be enrolled full-time the immediately succeeding academic term;
- Service performed by an individual as a real estate broker or salesman as defined in the Real Estate License Act (Vernon's Texas Civil Statutes, Article 657a); who holds a valid real estate license issued by the Texas Real Estate Commission, is being paid substantially by commission, and has a written contract that provides that the individual is not treated as an employee for federal tax purposes with respect to those services;
- Service performed by an individual as an instructor of persons licensed or seeking licensure as real estate brokers or salesmen; who is instructing a program or course approved by the Texas Real Estate Commission, and who has a written contract that provides that the individual is not treated as an employee for federal tax purposes with respect to those services;
- Service performed by an individual as a delivery or courier, provided the individual meets eight criteria as specified in the Texas Unemployment Compensation Act and enters into a contract indicating that the individual is an independent contractor;
- Service performed by an individual at a trade market for a wholesaler, sales representative of a wholesaler or manufacturer of consumer goods (under a written contract) or as a salesman for a wholesaler of consumer goods if such wholesaler or sales representative maintains a place of business at a trade market facility in a city with a population of more than 750,000; and
- Service performed by an individual as a landman engaged primarily in negotiating mineral rights exploration or development, is paid by the job rather than by the hour, and who has a written contract that provides that the individual is an independent contractor.
What Tax Rates Are Applicable to Governmental Employers?
Unemployment Insurance tax rates are computed for taxed governmental employers as a group. All taxed governmental employers have the same rate. Unemployment Insurance tax rates for taxed governmental employers are determined by how much the group has cost the Fund in benefit payments to their ex-employees as compared to the amount of taxes that the group has paid.
The annual contribution rate is expressed as a percentage. The numerator is the amount of all benefits paid, less benefits paid and reimbursed from other sources. If the amount of benefits paid is greater than the contributions paid, the excess benefits paid shall be added. If the amount of benefits paid is less than the contributions paid, the excess contributions shall be deducted.
The denominator is the amount of the total wages paid by employers in the group.
The table shown below is the history of governmental tax rates for the previous ten years.
| Year | Percent |
|---|---|
| 2011 | 0.80% |
| 2010 | 2.10% |
| 2009 | 0.50% |
| 2008 | 1.10% |
| 2007 | 0.50% |
| 2006 | 3.00% |
| 2005 | 0.30% |
| 2004 | 2.30% |
| 2003 | 0.70% |
| 2002 | 1.50% |
Basis For 2011 Rate Computation
| Benefits Paid and Charged to Taxed Political Subdivisions | $ 11,984,554.98 |
|---|---|
| - Contributions Collected in Excess of Benefits Paid (Reduction to Benefits Paid) | $ 5,687,995.61 |
| + Benefits Paid in Excess of Contributions Collected (Increase to Benefits Paid) | $ 0.00 |
| Adjusted Amount of Benefits Paid | $ 6,296,559.37 |
| Total Wages Paid by Taxed Political Subdivisions | $ 841,126,141.36 |
A governmental employer may elect to be a reimbursing employer and repay the Unemployment Compensation Fund, dollar for dollar, for benefits paid to former employees.
What Tax Rates Are Applicable to Employers Other than Governmental Employers?
Since January 1, 1986, new employers have been assigned an entry level tax rate of either 2.7% or the applicable industry average tax rate, whichever is higher. The industry average was based on the Standard Industrial Classification Code (SIC) prior to January 1, 2002. For tax year 2002, the industry average is based on the North American Industry Classification System (NAICS). The employer will keep the entry level tax rate for approximately 18 months, and will then be eligible for a tax rate computation.
Employers with North American Industry Classification System (NAICS) Code 115111 (Cotton Ginning) or 115114 ( Post -Harvest Crop Activities) receive the lessor of the computed unemployment insurance tax rate or 5.4%.