Trying to effectively manage your unemployment claims and costs can be a bit like trying to hold sand in your hands without losing any grains through your fingers – so much to track and so much to follow up on. Here are a few tips and tricks of the trade to make that job a bit easier.
Unemployment costs are beginning to come down from all time highs over the last 6 or 7 years, but they are still one of the most expensive employer costs. Why then, do most employers take for granted that their tax rates and the charges to their Unemployment Insurance (UI) reserve accounts are correct? Honestly, it is because most employers do not know that many of these charges (and therefore, their UI tax rate) are incorrect. Currently, depending on the state in which you are doing business, between 6 and 14 percent of all charges to your UI account are incorrect – with most of those mistakes being overcharges. These errors lead to higher UI tax rates (or for reimbursable employers – higher direct costs) that are calculated in error. With this kind of error rate, should you simply trust that no mistake was made to your account – NO you should not!
The following are some of the questions we have been asked over the last few months by clients and prospective clients. Feel free to contact us with your questions and we will work with you to Read more
Unemployment Insurance (UI) rates have been dropping over the last year and that is great news for the economy, however, it does not mean that these costs are not a significant percentage of your payroll – especially if you are in the Temporary Staffing Industry. Because turnover is a fact of life in this business, unemployment costs are higher than in most other industries across the country and controlling those costs is a critical part of being successful (and profitable) in this business. With that thought in mind, here are some tips for controlling (and even lowering) your UI costs.
- Use a UI Cost Management database of some sort – Temporary Staffing Companies have hundred, thousands, or in some cases even tens-of-thousands of UI claims each year. Managing claims, protests, charges, and tax rates using spreadsheets or on paper means you are spending far too many hours handling this process. Extra labor managing this process means extra labor costs and even if you are only dealing with hundreds of claims each year – manual processes are incredibly inefficient so you are likely “flushing money down the toilet”. A UI database (whether you use a software already on the market or have something custom built) makes this process less time consuming (and labor cost consuming) and more efficient.
- Track your costs by client – keeping an accurate record of your costs of doing business (Unemployment, Worker’s Compensation, Turnover Costs, etc.) by client allows you to be more proactive when the discussion of markup rate arises. This process can also help you to spot trends that you would not otherwise notice and you can fix problems as they arise (such as specific positions or shifts that are higher in turnover, spotting supervisors or managers who don’t document employee discipline or separation issues, etc.).
- Work with your clients to ensure that you get the documentation you need to fight UI claims – you should be communicating with clients (and potential clients) about how your UI program works and the documentation you may need to protest claims that should not be getting paid (Discharges for cause and Voluntary Quits). Most good clients will appreciate that you are aware of and actively seeking to manage these processes and they may actually learn from you as well.
- Get educated with the clients rules and expectations – there is nothing worse than working hard to place a candidate with a client only to have the assignment ended due to a violation of a previously unknown rule/policy or due to substandard performance (an expectation of which you were not aware). Don’t set yourself (or your candidate) up for failure by not asking the right questions up front. Don’t set your company up for higher UI costs because those questions were not asked. You can help your candidates succeed by getting the right information about your client and their rules/expectations and by communicating them to prospective candidates (often in a list of those items provided to each candidate placed).
- Use a “Hot List” when considering candidates for placement – on a weekly (or more often) report of your current open UI claims and sort it by “Potential UI Cost” (how much you could end up paying if the claimant collects their entire benefits). In this way, you have a list of candidates who are already costing you money in UI benefits – so, all things being equal among candidates for a placement, you should place them first (filling an opening and reducing your UI costs). Just a hint though, filter out those candidates you should not place on an assignment (quits, failed drug screens, etc.).
- Evaluate your employee handbook – I have beat this drum a great deal on this blog, your handbook is the key to managing UI costs. Make sure it is up to snuff or you will lose protests more often than you should and your profit margins will be lower than they should be.
These are just a few of the ways in which you, as a member of the Temporary Staffing Industry, can better manage your UI costs and improve your bottom line by lowering the costs of doing business. If you do a truly effective job at this, you could also give yourself an advantage over your competition by giving yourself the opportunity to offer your clients a lower rate (because you have lower costs).
Frustrated at losing your Unemployment Protests, so are most employers across the U.S. – who only win about half of the protests that they file with the various State UI Agencies. Why do employers lose so many protests? Well, there are a number of reasons for it, including poor claims management, lack of specific unemployment knowledge, and many more – however, one of the biggest reasons that employers lose unemployment protests is that their handbooks do not nothing to help them.
An employee handbook is essentially a list of policies and processes setting the expectation of the performance and behavior of an organization’s employees. Many of these policies are guided by state and federal employment laws and others are guided by the employer’s expectations and needs. Where employers can get into trouble is when they either do not have an employee handbook, have one that has not been updated every 18 to 24 months, or when an employer chooses to follow their own wants and needs instead of the laws.
So how can a handbook hurt your ability to win unemployment protests? Well, the answer lies in whether or not an employer’s policies follow the rules of unemployment – for example, unemployment examiners look for patterns of offense and patterns of disciplinary documentation. So, if your policies are overly strict and you terminate employees without building your case through progressive discipline (and there are many employers who fall in this category), you will not win your protest.
Another example of where your handbook can hurt you is through your attendance policy. Is your attendance policy helping you or hurting you? Do you properly track and document violations of this policy? Is your policy too strict or too lax? Do you have a policy regarding “no call/no show” absences – does that policy consider those absences to be job abandonment or does your policy use the word termination or discharge in regard to these types of absences – if your policy uses that language then the agency will consider those no call/no shows to be terminations instead of voluntary quits – and you will lose your protest.
Do you have policies in regard to employee behavior, progressive discipline, attendance, drug and alcohol free workplace, conflict of interest, falsifying employment information, etc.? These are the types of policies that help you win UI protests. Do employee sign off on the employee handbook? Do you keep these acknowledgements on file? These are all questions that all employers should be asking themselves.
As you can see, there is a lot to consider in regard to your employee handbook and how it affects your ability to win Unemployment Protests – a poor or out of date employee handbook can also get you in trouble with a variety of state and federal agencies as well so be certain to seek help in building and maintaining a strong handbook and you will keep out of trouble and win more UI protests.
Every year employers across the country pay billions of dollars in unemployment insurance (UI) taxes. Many of those employers simply pay their taxes without ever considering that these costs are manageable and can be reduced through better claims management and HR practices. In almost every case, with a few changes to the way an employer manages their unemployment claims and protests, and with a few changes to their human resources processes, an employer can save tens or even hundreds of thousands of dollars each year in UI taxes. The following are just a few tips to help employers get started: