In reading the news around the United States these days, one would assume that the economy is in full recovery and unemployment numbers are down – so employers should be seeing significant reductions in their unemployment costs – you would think, right? Wrong, for many employers, this is not the case – in fact, their unemployment costs are staying the same or even rising each year. What could possibly be the cause of this rise? The answer is simple – these employers are not effectively managing their unemployment insurance (UI) costs. The following are some keys to establishing an effective UI cost management program – but this is by no means an all-inclusive list:
Well, its that time of year again – when employers across the country get their UI Tax Rate notices and promptly go into “Sticker Shock” looking at the increased rate (and increased costs). Getting your tax rate notice is a bit like getting a root canal – you can’t avoid it and it is extremely unpleasant and painful. So, now that you know your tax rate increased and your unemployment costs are going to be higher, what should you be doing so you can break the cycle and not go through this again next January? The following are some suggestions:
For many employers (most actually), protesting unemployment claims that should not be paid (based on the separation reason) is a source of frustration and seems to be a study in futility – after all, the average employer only wins about half the time. Some employers get so frustrated with the process and with losing that they stop protesting altogether. Why do employers lose protests? Well there are several reasons for it:
Well, it is getting close to tax time for most businesses and Americans – it is also getting close to the time when most companies receive their new (2015) unemployment tax rate notice. Many companies will then suffer through something that I like to call “UI tax rate sticker shock” – their new tax rate will have risen more than they thought and likely more than was budgeted. For many employers, unemployment taxes have become the second highest employer tax, right behind FICA.
Of all the ways to control your Unemployment Insurance (UI) costs, none are more critical than winning the majority of your protests to the UI Agency. I have spoken to numerous employers who win less than 50 percent of the claims they protest (and a few even have confided that they seldom win). Why are these employers not winning the protests that they send in – there are several possible answers to this question:
Because, for most employers, unemployment taxes are a high cost item – often reaching tens or hundreds of thousands, and in some cases, millions of dollars, it is critical to protest improper claims – and win! However, winning UI protests is not as easy at it sounds – the average employer wins about 50 percent of the protests they file. Why so low, you might ask – because most employers don’t try to win the case until the claim is filed. In reality, the process should begin long before the separation – it should begin the moment an employee is hired.