Johnny Paycheck made this song the anthem of the late 1970’s. This song was written by David Allen Coe and expressed the dissatisfaction of a nation coming out of the economic downturn of the 70’s. Today I use the title of this classic country song to discuss controlling unemployment insurance costs.
Under the regulations an employee is not eligible to collect unemployment benefits if they are:
- Fired for cause
- Or resign voluntarily (“Take this job and shove it”)
Unfortunately many businesses believe that trying to appeal a claim for unemployment benefits is futile, but that is not the case. In fact it is necessary. If a former employee is trying to collect benefits that will be charged to against the companies experience; this can increase the percentage the company must pay. The rate (percentage) assessed against an employer is calculated using one of two methods, reserve ratio or benefit ratio. For space purposes we will not get into the details but in general both calculations look at the amount the company has paid in unemployment taxes and the amount of claim dollars paid out to former employees of that company. If certain parameters are not met the rate is increased or decreased accordingly.
Here are some recommendations to maintain or reduce your unemployment rate.
- Submit SUI reports in a timely manner.
- Respond to any claim notice completely and promptly.
- If the individual was terminated for cause or left voluntarily then be prepared to attend an appeal hearing.
- Offer job openings to qualified ex-employees.
One other option is to make voluntary contributions to the unemployment fund, similar to a one-time payment to increase the reserve. This strategy is only available in 27 states and should be carefully considered. There are several factors that can determine the impact this type of payment can have on the rate. (if you would like to know if your state allows voluntary contributions email firstname.lastname@example.org)
If you decide to appeal a claim, documentation is the key. If the employee was termed for cause, then make available disciplinary documentation, employee evaluations and any warnings that had been given the employee. If the employee resigned voluntarily bring the resignation notice the employee provided and exit interview documentation. Many times former employees will state that they felt they had to resign for reasons they could not disclose to the employer. A good exit interview will try to uncover any “hidden” issues. In addition always review your SUI statement to make sure you have not been charged for claims not related to your company.
Appeal hearings are supposed to be “neutral” however it seems many times that “neutral” appears to mean “on the employee’s side”, but with proper preparation and documentation you can successfully appeal unemployment compensation claims.
So the next time an employee says “take this job and shove it” you will now have a reason to appeal any unemployment claim they may make later. If you have additional questions regarding unemployment insurance then contact Gary@illuminaregroupinc.com (The Payroll Answer Guy) or call 615-542-1919.