By Dave Caldwell
Should I implement and enforce a vaccine mandate?
How are states going to rule on unemployment claims filed as a result of these mandates?
How can I minimize the impact to my bottom line?
These are just a few of the questions that employers - especially those with more than 100 employees - are wrestling with while vaccine mandates are being litigated. While employers have the prerogative to impose a vaccine mandate, the impact to their unemployment costs is still unknown. Even though vaccine mandates are in flux at a federal level, it is important that employers take note of several states that have moved to address employer-mandated vaccine requirements, specifically around the payment of unemployment insurance benefits.
Most states - in the absence of any specific vaccine mandate guidance within unemployment law, regulation, or policy - will probably make decisions based on existing provisions. This could mean that as long as the employer is enforcing a reasonable policy and providing ample time for its employees to comply, they might prevail by establishing that the employee quit without good cause or was discharged for willful and intentional misconduct of company policy.
So far, Equifax Workforce Solutions has seen some favorable outcomes to employers in many states, especially when full and complete details were provided regarding the communications around company policy and reasonable accommodations that were made. These rulings not only help protect employers against unemployment charges, but also mitigate the downstream tax impact from these claims.
In a few states, however, recently passed legislation gives very specific guidance regarding whether employees separated due to a mandate can receive unemployment benefits. For example, in Tennessee, Iowa, Kansas, and Florida, new state laws say explicitly that employees cannot be denied unemployment benefits if they are terminated due to failure to comply with a vaccine mandate. The provisions are less specific about voluntary separations in advance of a vaccine mandate.
While these new laws address the payment of benefits to the individual, only Iowa specifies that the employer’s account will not be charged. The net effect of the rest, where no specific mention of employer chargeability is outlined, is that benefits could be charged to the employer’s state tax account like most other benefits paid. This means there may be longer term tax implications for these employers.
It is important to note that even in cases like Iowa where the employers will not be charged directly, there is still a longer term impact. Typically, when benefits are paid but not charged to a specific employer account, these charges may still impact the state tax fund balance. Ultimately, increases may be seen equally across all employers in the form of a tax surcharge or a higher rate calculation table to help replenish the state fund.
Equifax encourages employers to continue to be diligent in responding as completely as possible to all claims resulting from a vaccine mandate so the states can make informed decisions on benefit awards.
If an employee chooses to voluntarily leave before a mandate goes into effect, you can provide:
Details of the mandate
Details of the voluntary resignation
Effective date of the mandate that wasn’t reached before the separation
If your company policy mandates that failure to comply results in termination, you can provide:
Details of the mandate
Proof of the employee’s awareness/acknowledgement of the mandate
The amount of time provided to comply
Details around the termination itself
Although it is still difficult to anticipate the final outcome of a federal vaccine mandate, understanding specific state laws and regulations and how they can impact you can help you make more informed decisions. In the meantime, remaining vigilant in providing all details about all separations can ultimately help protect your state accounts from unnecessary charges and longer-term tax consequences.
We have put together resources for employers like you who are looking for insights and guidance on if and how to better implement a mandate. Here you can find recent episodes of The Workforce Wise™ Podcasts and download our Perspective guides on how mandates might affect a wide range of areas from your unemployment costs, Affordable Care Act affordability, and even your onboarding processes.
The information provided is intended as general guidance and is not intended to convey any tax, benefits, compliance or legal advice. For information pertaining to your company and its specific facts and needs, please consult your own tax advisor or legal counsel. Links to sources may be to third party sites. We have no control over and assume no responsibility for the content, privacy policies or practices of any third party sites or services.