Employer’s Guide to Handling Unemployment Insurance Claims

Unemployment Insurance
                 Unemployment Insurance

When you lay-off employees or terminate them, you may face a significant issue which is handling the unemployment benefits for the employees. For various reasons it’s important that you deal with the issue in the proper way and defend your organization against any improper claims. The number of former employees that collected unemployment benefits after leaving your organization directly impacts your state tax rate. Handling unemployment insurance claims in the right way also helps you in discouraging lawsuits that a former employee may file for wrongful discharge or discrimination.

What is an Unemployment Insurance Claim?

An unemployment insurance claim is a notice filed by an employee, after being laid off, for getting unemployment insurance benefits. Abbreviated as UI, unemployment insurance is a way of providing financial aid to people who are unemployed due to unavoidable circumstances. Not all former employees can claim unemployment benefits. Only the employees who lost their job due to poor performance or layoff (owing to downsizing or if a company shuts down) are entitled to such benefits. Workers who have been terminated for misconduct or those who have resigned voluntarily cannot claim unemployment benefits. However, the interpretation of misconduct differs with people and in case the organization receives an unemployment claim, it needs to analyze it carefully.

Although the general regulations for unemployment insurance have been established by the Federal Unemployment Tax Act (FUTA), it is a joint federal and state program. This implies that each state, district and territory has its own set of rules and regulations.

There are a few best practices that you can adopt for handling unemployment insurance claims efficiently:

  1. Immediate Response

If you delay or fail to respond to a claim notice within the required time period, you may end up losing your case. In that scenario you would be obliged to pay even if the employee is not eligible to receive the benefits. In the absence of your timely response the employee will win the claim if he indicates in his notice that he was terminated without any proper reason.

2. Maintain Proper Documentation

It’s important to maintain documentation that keeps a track of the employee’s performance and conduct in the organization. This is a standard HR practice. In many cases, properly maintained documentation drives the decision in employer’s favor. To defend against claims from employees that are associated with fraud, company policy violations or misconducts, documents like employee handbooks, employment applications, resignation letters or performance improvement plans can help the employers.

3. Keep Track of Probationary Period

In many states the probationary periods vary in length from 30 to 120 days. For employers in such states, unemployment benefits given to employees are not charged against the employer’s tax account provided the employee has been terminated within the probationary period and the employee had full knowledge about the length of probationary period. Thus, it’s important to note down the probationary periods in the employee handbooks before terminating employees on the basis of ‘no improvement within the probationary period.’This would help an employer to reduce his tax liabilities even if he pays unemployment benefits to the employee.

4. Make Logical Decisions

In some cases the person who is claiming the benefits could be a beloved or longtime employee. In such cases, it becomes quite difficult to make decisions and employers tend to mix personal emotions with business decisions. However, employers must keep in mind that unemployment insurance program is a pool fund where all the employers contribute. If you are not protesting an unemployment claim because you feel bad for a former employee you are ignoring the fact that your decision may impact the integrity of the entire program.

Handling unemployment insurance claims requires proper strategy and logical decisions. If you need to lay off a worker or fire him, you must use proper procedures.And, if you think that an employee is ineligible for an unemployment claim then you must protest it. In this way, being an employer, you can not only lower your unemployment tax rate but can also help safeguard your organization’s bottom line which is getting affected due to unemployment taxes.










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