How to Manage Unemployment Claims in 3 Simple Steps

As all business owners know, unemployment insurance (UI) claims and their legal and financial ramifications can be a challenging issue. While business owners have no control over federal UI rates, they can mitigate their state costs because charges are based on a company’s unemployment history using a formula that considers payroll size, the amount paid into the system, and the amount of benefits that former employees have collected. Employers interested in offloading their UI costs should avail themselves of an HR outsourcing solution. Otherwise they should be prepared to deal with UI claims and the paperwork required to refute them.

Step One:
One of the first steps the business owner should take is to understand that anyone who is no longer performing services for their company can file a UI claim even in an “employment-at-will” state. Whether or not the claimant can draw benefits depends, however, on whether they meet the monetary eligibility, work separation, and continuing eligibility requirements. Those requirements are regulated under state law even though UI is federally mandated. Rewarding of UI claims also depends on how successful the business is at maintaining a detailed paperwork trail regarding employee, independent contractor, and vendor classifications as well as wage and billing records.

Step Two:

The second step involves adequately classifying employees as exempt or non-exempt. There are several ways to classify people you might pay such as probationary, day laborers, temporary, full or part-time, seasonal, etc.—the burden of proof is on you to accurately record their status.

Do you know whether you are exempt from wage reporting and unemployment payments because of any special exemptions that may exist in your state’s law? If you don’t, a consultation with a specialist in HR might help. (note: EmployerNomics has such specialists on staff if you want to use the form below.)

Step Three:
A question that needs to be answered is whether or not the business has the proper procedures in place to hire and fire employees. Problems with all employees should be well documented in terms of progressive discipline and employees should know they can be fired for misconduct (and not collect UI) but if they were fired for incompetence only, they could potentially collect.

Ask yourself these additional questions as well.

• Are you documenting the reasons why those who quit voluntarily are leaving?
• Are you monitoring UI statements so your company is not mistakenly charged for employees who lost their claim?
• Do you know that you cannot “bribe” an employee to accept a severance package to prevent a UI claim from being filed?
• Did you know that the burden of proof on work separation cases depends upon who initiated the work separation?

As you can see, there are wide variety of HR steps and questions to be answered surrounding unemployment insurance and as a business owner, it’s your responsibility to take the steps necessary to address these questions if you don’t know their answers. Contact us using the form below if you wish to discuss cost-effective management of your unemployment-related issues, so that you can focus your resources in the areas of your business that are better suited for your time and expertise.

¹Title XXXI LABOR Chapter 443
REEMPLOYMENT ASSISTANCE
443.031 Rule of liberal construction.—This chapter shall be liberally construed to accomplish its purpose to promote employment security by increasing opportunities for reemployment and to provide, through the accumulation of reserves, for the payment of compensation to individuals with respect to their unemployment. The Legislature hereby declares its intention to provide for carrying out the purposes of this chapter in cooperation with the appropriate agencies of other states and of the Federal Government as part of a nationwide employment security program, and particularly to provide for meeting the requirements of Title III, the requirements of the Federal Unemployment Tax Act, and the Wagner-Peyser Act of June 6, 1933, entitled “An Act to provide for the establishment of a national employment system and for cooperation with the states in the promotion of such system, and for other purposes,” each as amended, in order to secure for this state and its citizens the grants and privileges available under such acts. All doubts as to the proper construction of any provision of this chapter shall be resolved in favor of conformity with such requirements.
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