How to Minimize Unemployment Insurance Costs

If you are concerned about possible unemployment claims’ monetary ramifications, Arizona’s Department of Economic Security (DES) offers various strategies to restrain your costs. After outlining three key approaches, it examines two effective methods in more detail.

Overview of Recommendations

Stabilize Your Workforce:

  • Screen all job candidates carefully to hire the best matches for your openings and company.
  • Recruit versatile workers whom you can shift to other jobs if necessary.
  • Relocate staffers to other jobsites when appropriate.
  • Use your regular personnel to handle maintenance and repairs during slow times instead of paying outsiders.
  • Consider the Shared Work Program to avoid layoffs. (See last section for description.)

Curtail Your Unemployment Charges:

  • Keep detailed work documents including employment agreements, staffer performance, warning dates and specifics, and any additional disciplinary measures.
  • Return or respond electronically to every Notice to Employer you receive within 10 business days of its date. Explain the separation reason unless it is a work shortage.
  • Appeal any determination you believe is incorrect.
  • Notify the DES immediately if you can provide information that an unemployment claimant is not available or able to work, refused a job offer, or started a new position.
  • Complete and respond to every wage audit form you receive punctually.

Maintain an Affordable Tax Rate:

  • Evade penalties by turning in quarterly wage reports on schedule.
  • Be timely about paying taxes to receive the highest Federal Unemployment Tax Act (FUTA) credit. Through National PEO’s payroll tax filing services, our experts can submit your unemployment taxes correctly by deadlines, which also prevents late fees.
  • Disclose all business changes promptly.
  • Do not report exempt employees and non-taxable payments.
  • Compute each tax disbursement carefully.
  • Extend voluntary annual contributions to reduce your company’s tax rate. (See next section for explanation.)

Voluntary Taxes

Making a voluntary tax payment by Jan. 31 can decrease that year’s tax percentage. The annual notices you receive about your unemployment tax rate include instructions on making voluntary payments on the backside. They detail how to calculate your additional sum for a better reserve ratio to lower your tax proportion. Just compare that optional total against your potential tax decline to determine if remitting extra money will result in savings.

Paying by check instead of electronically is advisable. Specify the reason for that contribution on your check. For proper processing, mail it to the Unemployment Insurance Tax Experience Rating Unit.

Shared Work Program

When facing a workforce reduction, the Shared Work Unemployment Compensation Program may be helpful. This temporary alternative allows your company to divide its existing tasks or work hours between a specific group of involved employees to avoid a layoff. During a plan’s one-year term, staffers can receive part of their unemployment insurance (UI) benefits plus employer compensation for the decreased hours they work.

For instance, a firm facing a 20-percent production cutback lays off a fifth of its workforce usually. However, a Shared Work arrangement could enable that company to keep its entire staff by shrinking its workweek from five days to four. Every participating employee would receive 20 percent of his weekly benefit amount plus income for four workdays.

Program advantages:

  • Maintains quality and production levels
  • Retains experienced workforce, which makes recovering full capacity rapidly possible
  • Eliminates administrative costs and training expenses involved with hiring new recruits
  • Protects affirmative action achievements
  • Upholds high workforce morale
  • Distributes the downturn’s impact more equitably by retaining new hires, who are most vulnerable to layoffs
  • Preserves employees’ skillfulness and advancement prospects
  • Stabilizes consumer spending habits, perhaps making recession milder
  • Reduces public assistance outlays

Unlike unemployment, the Shared Work Program does not require a staffer to:

  • Conduct a work search actively
  • Apply to other companies’ openings
  • Be available to accept another job
  • Take work besides assignments through his Shared Work firm

To be eligible for this unique monetary assistance for as long as 26 weeks, each staffer must meet these criteria every week:

  • Your organization drops the employees’ normal weekly work hours by 10 to 40 percent.
  • The worker who files a UI claim meets eligibility requirements to collect regular benefits in Arizona.
  • He has not surpassed the maximum benefit total for his UI claim’s payment year.

Multiple plans covering separate employee groups may be in effect concurrently. Download the Shared Work Application. Submit each completed form with a participant list 10 or more days before your proposed start date. You will receive DES approval or disapproval by mail.

Categories: Business Tips