Your Small Business Guide to Unemployment Insurance

There are many misconceptions around unemployment insurance, especially as it relates to small businesses. Instead of believing what you assume are the actual facts, check out the answers below to take control of your unemployment claims.

Who is eligible?

The hard and fast rule for this is any employee who leaves at no fault of their own. While this usually means layoffs, certain reasons for quitting are considered. From a small business perspective, some of the most common reasons will be owner retirement, closing due to low sales, or relocating the operation. In these situations, UI helps your employees in the weeks it takes them to find something new.

Who pays UI?

Most of the time, it is strictly the employer. A few states take a percentage out of the employees’ earnings as well, but overall it is the burden of the business. The Great Depression spurred the initial creation of unemployment benefits to assist those who’d lost their jobs. It was the Social Security Act of 1935 that brought both the Federal Unemployment Tax Act (FUTA) and State Unemployment Insurance (SUI) to life.

Does the tax rate remain the same?

No! While both the federal and state taxes are paid quarterly, the rate changes based on laws passed and your unemployment performance. For example, the more turnover you go through and more claims filed means the more you’ll pay in taxes. Essentially, the fund needs to keep itself ready to assist employees and will increase if the need demands.

Do I have to pay every claim?

Absolutely not. Once a former employee files a claim, you’ll receive a “Notice of Unemployment Insurance Claim Filed.” Here you can either accept or contest, and if approved it passes to a state board for review. You have 10 days to contest and failing to do so can also affect your UI tax rate.

For this reason, it’s essential to keep thoroughly document records of your employees and their reasons for leaving. If you choose to contest, you’ll have to submit why with evidence as part of your case. Poor recordkeeping can have you paying more than necessary.

Can I get help?

Of course! Unemployment Tracker is a company who understands the importance of handling claims in a timely and efficient manner and is here to make sure you don’t incur extra costs. Our full range of solutions makes it easy to get exactly what you need with our fully customizable software. Take control of your UI today and request a live demo from Unemployment Tracker.