By Dave Caldwell
As many employers have noticed, the frequency of wage audits has been on the rise. On average, 12-15% of our clients’ unemployment claims are audited. According to the United States Department of Labor, nearly $11 out of every $100 in unemployment benefits are improperly paid; therefore, nearly $3 billion in unemployment benefits are improperly paid annually. State agencies use wage audits to help reduce improper payments by attempting to identify claimants who simultaneously collect a paycheck and unemployment benefits.
While the rise in wage audit frequency can ultimately benefit employers by reducing the cost of improper payments and helping with fund solvency issues, it is equally important to note that failure to control improper payments has a communal effect on employers as the cost to administer the unemployment program increases. Even though the outcome of the wage audit process can be beneficial to employers, the process itself can be time-consuming and burdensome. Guidelines vary by state, and many states are no longer willing to accept data that isn’t delivered in the format specified. There are also various penalties and risks associated with incomplete or untimely wage audit responses. While this impacts all employers, multi-state employers should be particularly diligent to ensure they are responding appropriately in each state.
Wage audits can also result in significant workload for many employers – particularly in industries with higher turnover like retail and restaurant, as they recalculate wages and align them into the proper format and make sure all required data (including special pay) are reported or excluded based on the particular state requirements.
Recognizing the market problem, Equifax has developed a new solution that can help ease the burden of the wage audit process. This new service helps take the onus off of busy HR departments that might not have time to retrieve archived payroll records and complete a wage audit by the required deadline. To learn more about this new service, or to find out how Equifax can help your organization with unemployment cost management, contact Pete Krieshok at pete.krieshok@equifax.com.