How to Avoid Extra Unemployment Costs
Unemployment tax rates are on the rise across the country. And with 34 states having depleted their Unemployment Trust Funds, it’s a trend we can expect to continue. Now it’s more important than ever to manage your unemployment situations carefully, so unqualified employees can’t file claims that cost you more money.
The Unemployment Insurance System is set up to provide benefits to workers who have lost their jobs through no fault of their own. However, while you may have terminated an employee for just cause, that employee may apply for—and receive—unemployment insurance, even though they should not be eligible. This is a situation you can avoid.
Keep careful records
Many false claims start with inadequate or incomplete records, leading to confusion about why the employee was terminated. The most important step you can take is to update employee records carefully:
- Stick to the facts. Don’t include derogatory remarks or personal opinions.
- Record incidents as they happen; don’t rely on memory alone.
- Record all verbal warnings. Outline actions the employee will need to take to correct the problem and the consequences if they fail to do so.
- Encourage employees to sign written warnings. If they refuse, have a witness acknowledge the refusal.
- Document, document, document.
Be clear with terminated employees about their options
Terminated employees may not understand whether they are eligible for unemployment compensation. You can help them by giving them copies of your company policies. Also, conduct exit interviews and document them.
Avoid “bad eggs”
There’s no reason not to consider hiring employees who have filed for unemployment benefits. But to avoid being taken advantage of, you should also exercise caution when hiring repeat “filers,” who may be milking the system. In your interviews, be sure to ask new hires about frequent gaps in their employment record.
The most effective unemployment control starts with operational excellence: solid hiring practices, clear termination policies and procedures, consistent disciplinary actions and careful documentation. It’s really no more than all employees should expect of their employers.