Total Tax

December 2011

Burden-of-Proof Can Be a Bouncing Ball at UI Hearing

The typical UI hearing is a fact-finding process. It is more relaxed in its procedural features than other hearings and is without strict adherence to the technical rules of evidence. However, within this process, the UI laws and rules regarding standard-of-proof and the burden-of-proof are essential to an employer winning the unemployment case. Burden-of-proof, in the context of a UI claim or hearing, rests either upon the claimant to prove good cause for voluntarily leaving employment, or with the employer to prove that a discharge was for misconduct. The often misunderstood aspect of burden-of-proof is that it never shifts. Once the work separation issue is determined (quit or discharge) the burden of proving good cause or misconduct "lands" flat with either the claimant or the employer. It does not "bounce" back and forth as evidence and testimony are presented at the UI hearing.

Burden-of-proof involves two concepts: the burden of producing evidence (sometimes referred to as the burden of going forward with evidence) and the burden-of-persuasion. The burden of producing evidence resides initially with the party who has the obligation to establish a particular element of the UI case. With a discharge separation issue, the employer has the burden of proving the claimant was discharged for work-connected misconduct.

The employer must produce evidence that the claimant, who, for example, was discharged for violation of the attendance policy, knew or should have known the policy. Evidence such as the claimant's signed statement acknowledging receipt of the policy, or documented written and verbal warning that the claimant had violated the attendance policy fulfills the obligation of producing evidence. It would then fall upon the claimant to produce contrary evidence to refute the employer's evidence. If the claimant fails to do so, the administrative law judge or hearing referee would be bound to find for the employer on this element of the issue of misconduct. Keep in mind that while the burden-of-proof does not shift, the burden of producing evidence on a specific element may "bounce" from one party to the other.

The burden-of-persuasion is simply the obligation to convince the "decider" of the issue. If a party has satisfied his or her burden of producing evidence of an asserted fact, the administrative law judge or hearing referee must then determine whether or not that party has persuaded him or her on that fact. If not, the fact must be found against the party asserting it. Furthermore, a party may have the burden of persuading the hearing referee "beyond a reasonable doubt," "by clear and convincing evidence," or "by a preponderance of the evidence." The latter is the standard applied in virtually all UI hearings. It requires that the party who bears the burden-of-proof to persuade by "the greater weight" or "fifty-one percent" of the evidence.

In summary, the burden of proof remains with the party whom the law and rule says has the burden, according to the separation issue in the UI case. The burden of providing evidence, a component of burden-of-proof, may shift back and forth between the employer and the claimant. It is important to follow this "bouncing ball" component of the burden-of-proof as evidence unfolds during the UI hearing, in order to persuade the referee to decide the case favorably.

Federal Unemployment Tax Act Credit Reductions Scheduled for 2011

In an effort to repay outstanding state loans, employers in at least twenty states will face higher FUTA taxes this year.

When state unemployment insurance funds are depleted, states draw from a special federal trust fund. If such loans are not repaid within two years, employers carry the burden by losing part of their FUTA credit for state UI contributions, effectively increasing the FUTA tax rate for wages paid by employers in the affected states. As many as 24 states originally faced this tax increase for 2011, but several states have taken action, such as issuing bonds to repay the federal UI loans, to avoid the credit reduction.

The FUTA tax typically increases annually by 0.3 percent, or $21 per worker, until loans are repaid. For example, Indiana employers had a net FUTA tax rate of 1.1 percent (.8 percent + .3 percent) for 2010, but expect a 2011 FUTA tax rate of 1.4%.

FUTA Credit Reduction taxes are payable with IRS Form 940 in January 2012, based on wages paid in 2011. November 10 was the deadline for states to repay loans or take other specified action. As of the date of this publication, official determination has not yet been received from the IRS; however, the projected tax increases are as follows:

Massachusetts Voluntary Contributions

Would you like to possibly decrease your unemployment rates? A voluntary contribution may be the answer for you. Voluntary contributions are those optional payments an eligible employer can make, in advance, to buy down their unemployment insurance tax rate.

The Massachusetts Department of Unemployment Assistance (DUA) requires that employers use their QUEST system to determine the exact amount of a voluntary contribution that is necessary prior to making the payment. It is important to remit the exact amount as failure to do so will result in the payment being applied towards other outstanding UI, UHI, or Workforce Training Fund debt. Voluntary contributions can be made online via ACH debit or by check mailed to DUA accompanied by the payment voucher which is available to print.

For more information regarding how to determine eligibility, make a voluntary contribution, or to determine the required payment amount, visit the DUA Website at https://uionline.detma.org/Employer/Core/Login.ASPX. Once you have logged on to QUEST, locate the Voluntary Contribution option under Account Maintenance.

If you have any questions regarding this process, contact the DUA Contributions Department at 617-626-6896.

2012 ADP and Bank Holidays

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Unemployment Compensation Services Update is a quarterly update for ADP’s Total Tax clients to address the issues of employee personnel practices, state unemployment tax, and payroll tax filing matters. This publication is distributed with the understanding that the publisher is not engaged in the practice of law. If legal issues arise in the context of your business, independent legal counsel should be consulted.

Submit unemployment-related documents, including your company payroll code, company name, and contact telephone number on all correspondence to:

Automatic Data Processing, Inc., Total Tax Department, P.O. Box 6000, San Dimas, California 91773-9060

Hotline Number: (800) 959-6246

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