Control the Cost of Unemployment

Control the Cost of Unemployment

by National Peo

The latest numbers from the U.S. Department of Labor (DOL) show the unemployment rate reaching 6.7% and rising as of November of this year.  Many think that unemployment only affects the unemployed. But have your really thought about how it affects your organization and your current employees?

Unemployment insurance replaces part of the income you lose when you become unemployed. It is a benefit available to workers out of work through no fault of their own.  Employees wishing to collect unemployment benefits need only complete an application which serves as an explanation to the Unemployment Administration as to why they are no longer employed.  Once the application is received, a notice is sent to the employer asking for verification of this application (better known as the unemployment claim).

Each employer pays into an account from which these benefits are paid.  The money the employers pay is called ‘unemployment tax’.  The rate at which employers pay into the account is determined by the amount of claims paid to former employees of the respective company.  In other words, the more claims that are paid to your former employees, the more unemployment taxes you will pay.  Your rate is reviewed on a regular basis and is adjusted based on the number of claims charged against your account.

So what does this mean to you and how can you control your unemployment costs?  Easy; document, document and did I mention, document? When an unemployment claim is filed, the employer is given the opportunity to dispute the claim.  If the employer can show that the employee left voluntarily for little or no reason or if the employer can show that it had good cause to terminate the employee, the claim may be denied and the employer’s account is not affected.

But don’t get too excited yet.  Simply stating that the former employee should not receive benefits is not good enough.  The unemployment administration will ask for documentation.  Actually, they’ll want to see progressive documentation.  For instance, if John Doe is terminated for poor attendance, you will need to show that Mr. Doe was notified of his poor and unacceptable attendance record, (preferably in written form), and that he was ultimately terminated due to poor attendance.  Simply terminating him on the first offense will not be enough to show that he was well aware that his actions were leading to his termination.  However, if you can show that he was warned then ultimately terminated despite the warning, you may establish that John Doe lost his employment through his own doing and is therefore completely at fault for his loss of employment.

Work with your HR representative to establish a clear set of policies as well as a progressive discipline standard.  Furthermore, if you are taking the time to speak with an employee about unacceptable behavior, document it.  This will make it clear that you are serious about your policies and will act as paper back-up when disputing future claims.

With a little attention to documentation, you may save your organization hundreds if not thousands of dollars per year in unworthy unemployment claims.

If you have questions or would like more information about the topics discussed in this article, please contact our HR Department by clicking here. Please be sure to reference the title of the article in your inquiry.

This article was sponsored by National PEO, LLC. National PEO is a leading provider of PEO services to hundreds of companies all over the US. Let us handle the burden of Payroll Services, Benefits Administration, Worker’s Comp, and Human Resources for your company. Contact us today to request a quote!

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