By Jason Pachucki
Stories of layoffs have grown in number in recent weeks. From retail giants to tech firms, we’re seeing these layoffs as a result of inflation, ongoing supply chain issues, and pressure to increase profit margins. As a result of layoffs and terminations, naturally, unemployment claims are ticking upward by the week, according to the DOL report issued on August 4th.
How can employers address the effects of layoffs and increased unemployment claims? While employers are combatting the pressures of inflation, they can become distracted or they may lack the resources to properly respond to unemployment insurance claims, sometimes leading to unnecessary increases in unemployment costs. Here’s how you can help avoid a hike in unemployment insurance tax rates resulting from an increase in unemployment claims.
There are new requirements for responding to claims. The Unemployment Insurance SIDES (State Information Data Exchange System) recently underwent a mandatory upgrade. Existing SIDES third party agencies, such as Equifax Workforce Solutions, as well as employers that maintain their own SIDES integrations, must provide this additional information to help State Workforce Agencies (SWAs) make a more informed determination earlier in the claims process. This upgrade is designed to help reduce improper payments and unnecessary appeals and hearings.
These specific separation types include:
Involuntary: Performance, alcohol/drug cases, and theft/falsification
Voluntary: Failed to return, dissatisfied, and health reasons
Lack of Work: Reasonable assurance to return (such as in the case of teachers or others with a designated return to work), and partial unemployment
No one likes surprises when it comes to their unemployment programs. To help meet the new requirements when responding to your claims, it is imperative you’re providing complete separation information as required by the applicable state. If you do not have good separation processes in place, now is the time to upgrade your employee offboarding process. Here are just a few things you can do now to help mitigate a cost increase:
Help ensure your employee offboarding packets are complete and the proper notifications are done. Your separation notices should include everything from state requirements to company required items. That way when a claim comes down the chute, you’re more prepared to meet the necessary requirements to the state. Since 35 states currently require these notices, the best practice is to have a process in place for all states.
Understand how you can better reduce state errors and fraudulent payments. Consider meeting with a subject matter expert like Equifax and learn where you may be vulnerable to unnecessary fraud or claims.
Examine your claims hearing process. The outcome of a hearing is often difficult to predict. You could be missing out on a huge opportunity to reduce your unemployment charges. With the right hearing representative at your side, you may be better prepared for each case and could potentially increase your win outcomes.
Contact us to learn how our Unemployment Cost Management can help you (i) move the needle on creating better processes, (ii) reduce your exposure to regulatory risks, and (iii) overcome challenges with your unemployment programs.
Check out our Perspective on how inflation is affecting HR teams to learn steps you can take to help you prepare for the trickle down impact to HR.
The information provided is intended as general guidance and is not intended to convey any tax, benefits, 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.