What You MUST Know About Handling Unemployment Claims

Posted by
Chief of Minds
October 7, 2022

Even the best employment relationships don’t last forever. When they come to an end, you (the employer) must be prepared for what may happen next. If the former employee files for unemployment insurance benefits (UI), you’ll find a notice of an unemployment claim sitting on your desk soon. If you are not experienced with the process or improperly informed, you can lose business, money, and a significant amount of time from inaccuracies. In this article, we’ll guide you through what all employers must know to properly handle unemployment claims, saving time and money.

How to prepare before the termination ever happens?

At the start of their employment, have a clear, signed job description, employment policy, and performance improvement plan in place. If an employee is terminated based on performance issues, they’ll be asked if they did their work to their best ability. He or she can answer yes and receive unemployment benefits when, in fact, they were not performing at the standard your company required.

What if you don’t agree with the former employee’s claim?

Let’s say you’ve had a good look at the claim for unemployment insurance and you don’t agree with it. Maybe they were fired with cause and you believe the information is inaccurate. Ask yourself: Were they fired for serious misconduct? Do you have evidence to justify your decision? Can this result in a possible lawsuit? If you feel that your decision to terminate the employee was valid, you may appeal the claim for unemployment insurance. This is why keeping proper documentation is imperative to prove you had a valid reason to terminate the employee.

What happens if you file an appeal?

When an appeal is filed, the state sets a hearing date. At the hearing, you and the claimant provide a testimony pertaining to the employee’s termination. Based on the document and testimony, the hearing officer decides whether the claim will be upheld or reversed. Keep in mind that you should weigh the pros and cons before pursuing an appeal. It’s best to be very selective about the appeals you file because it can be an extremely lengthy and costly process.

How are unemployment insurance payments calculated?

UI payments are calculated as a percentage of the employee’s income over a 52-week period. Typically, they are claimed for six months, but they can be claimed until the person finds a new full-time job.

How are unemployment benefits funded and how are your taxes impacted?

Unemployment insurance is funded by employers’ federal and state taxes. What you pay in taxes are based on the size of your business, how much you’ve paid into the system, and the number of former employees who claimed unemployment benefits. All employers are required by state law to make taxable or reimbursable contributions to the State Unemployment Compensation Fund. Although there’s a concerted program of costs, it is possible to reduce your UI costs and save money.

What can you do to prevent overcharged payments and save?

The Benefits Measurement Program estimated that employers overpaid 12.71% in UI benefits in 2016. To ensure claims are handled properly and you are not overcharged, you must send in timely reports of new hires and separations, as well as file accurate, prompt request for wage and separation information. It’s important to also hire an HR professional to conduct a UI Benefit audit to ensure accurate charges to your account, as well as to be proactive with unemployment insurance claims from an employee’s first day to their last day.

Which Human Resources professional should I hire for my business?

Our HR experts at Chief of Minds can help prevent overcharged payments, save you money and stay on top of all unemployment insurance claims. Contact us here to learn more and get started.

Was this article useful? Chief of Minds provides innovative human resources and payroll services that position your business for growth and increase productivity and profitability. Our full-service human resources strategy firm focuses on helping small to medium businesses decrease workload, improve HR functions and reduce costs. We’re here for you to win!

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