Are You Managing Your Unemployment Claims?
Small business owners experienced an increase in their per employee unemployment insurance tax liability in 2011, due to high turnover, a weak economy and reduced state unemployment insurance trust fund balances.
Some increases were as high as 250% per employee, and is challenge for small business owners facing government regulations and weak consumer spending. However, there are actions small business owners can take to reduce and then plan for these expenditures.
Unemployment insurance tax costs vary depending on state laws, ranging from less than 1% to more than 13% on the worker’s taxable wage base.
Follow these tips to control unemployment insurance costs:
- Hire with care. The more selective you are, the better the employee you hire, the less the chance you will terminate, and ultimately wind up paying unemployment insurance. The liability process begins from the day you hire, so sound hiring processes keep costs down. If you’re hiring it’s an employer’s market so take advantage of it and be selective.
- Assimilate and train new employees. Be certain your employees know what is expected from the first day. Have them sign off on receipt of an employee handbook, document performance, and performance related issues. If the former employee can prove that they were not made aware of policy or poor performance; they win the claim. It’s that simple.
- Take proper and timely disciplinary action. If an employee violates company policy, take disciplinary action and document it at the time of the occurrence. Whether the warning is verbal or written, document the conversation, and if it was a written warning, have the employee sign that they received the warning. This proves that they knowingly violated company policy.
- Conduct performance reviews. Reviewing employees annually is important to not only praise them for good performance, but to also to take corrective actions. Again, be sure to document the review. Recognition is important and much easier to provide but shying away from the poor performance discussion can cost you. Be sure to manage the performance and corrective action of your employees with the same frequency across the board. This assures that you will not be accused of providing performance reviews and corrective actions upon only those you “dislike.”
- Respond to the UI claims you receive and participate in the process. Any employer who actively participates in the process enhances their chances of discouraging unwarranted claims and charges against them. Respond to claims as soon as you receive them and attend hearings, and remember you have the right to appeal. Some firms put a claim away to deal with later and never get to it. Once this happens, there is no opportunity to provide information about what happened, and the claim will be granted.
- Review your statements. Once the process is complete, you are no longer responsible for the person’s unemployment insurance. Review your statement carefully to ensure you were charged appropriately. The state can make mistakes with charges being filed against employers that should not have been.