NBI SEMINAR MATERIALS: Traditional Ways to Manage Unemployment Compensation Costs
I had the great opportunity to lead (perhaps “teach”) a continuing legal educationseminar hosted by the National Business Institute. The subject was “Human Resource Law From A to Z” and I had opportunity to speak on Unemployment Compensation. I was joined by other capable attorneys who each had their own topics to present.
Although NBI published the materials, I retain the ownership of the portions I wrote, which I will post here in this blog.
Copied below are the materials I wrote for the section entitled “Traditional Ways to Manage Unemployment Compensation Costs.”
Traditional Ways to Manage Unemployment Compensation Costs
Many employers appear to be under the impression that since they pay unemployment compensation through mandatory taxes, there is little they can do to manage their unemployment compensation costs. The fact is, however, is that there are a few ways to manage unemployment compensation costs.
The first, and most basic, way an employer can manage unemployment compensation costs is to contest a claim for benefits. For example, if a claimant is found to have voluntarily quits his employment or commits willful misconduct (see above), the employer is not charged for the benefits, however employers must be proactive at every step – specifically contesting a claim, submitting its forms in a timely fashion to the Department of Labor, appealing an adverse determination and/or attending a referee’s hearing – in order to ensure, to the best of its ability, that it is not charged for benefits. To that end, providing the Department of Labor complete paperwork, a full description of the cause of the employee’s separation from employment, and supplying additional information as it becomes available is a must. Similarly, employers are given notice by the Department of Labor of their employees’ base period wages, which can also be appealed in order to avoid an award of benefits being charged to their account. Being sure to attend all hearings, submitting all documents within time allotted, and appealing adverse decisions can all help reduce costs.
An employer’s tax rate for unemployment compensation depends on the the number and frequency of successful claims for benefits, therefore, successfully contesting benefits can help reduce the applicable tax burden.
If a claimant is successful in securing benefits, an employer may be eligible for relief from being charged for the claimant’s benefits if it properly files for it. An employer may be relieved of charges if, for example, the claimant was terminated for cause or voluntarily quit, or if the claimant became unemployed due to natural disaster, and/or the claimant is self-employed,
There are also some every day strategies and policies which can be implemented to help manage unemployment compensation costs.
- First, being diligent and careful about who one hires, and ensuring a good work environment, helps ensure employees will have longer terms of employment, and less need for benefits. Relatedly, be liberal about offering leaves of absence as this also reduces the odds of employees quitting. Keeping turnover to a minimum is the goal. When employees are terminated (for whatever reason), it may be advisable to conduct an exit interview to document the reason for termination.
- Second, it is vital to maintain complete and detailed employment records. These records include each and every disciplinary issue, work quality issue, and/or personality issue, and the dates of these issues, the names of all involved, the details of the investigation of these issues, and how they were resolved.
- Third, an employer should be sure to furnish its employees with a copy of its employment manual/policies (with signed verification of receipt). So doing ensures all of its employees have had notice of what is expected of them, how discipline is applied and enforced, and what the work rules are.