Total Tax
January 2010
Is Your Company Practicing Good Claim Management?
The best time to evaluate the merits of an unemployment insurance (UI) claim is before the claim is filed, that is, before a separation becomes a claim.
Each state has a set of regulations that determines if a person filing an unemployment claim will be eligible to receive benefits. Generally, a claim for benefits is denied when the separation is a discharge due to misconduct. Taking the time to properly document an employee's behavior can make a big difference when contesting unemployment benefits for an employee who is discharged for misconduct.
Disciplinary Action Documentation
To prove misconduct, the employer must document incidents that occurred to show that the employee was aware of the infraction and what repercussions (e.g., additional warning, termination) would be in effect if the behavior continued.
States define misconduct differently; however, the basic definition is considered to be "conduct that is willful and is in disregard of standards of behavior which the employer has the right to expect." The violation of a company rule, with knowledge of the rule, could constitute misconduct. Likewise, poor attendance or unsatisfactory job performance can also amount to misconduct if it was within the employee's power to meet the requirements and willfully failed to do so. It is important to note that with job performance issues, it must be shown that the standard of performance is reasonable and that the employee was fully capable of performing to standard.
In addition, it is extremely important that any and all incidents are documented. In instances of minor infractions or continued behavioral issues, prior counseling or warnings are needed to prove the employee was aware of the issue, the policy, and any repercussions for not showing improvement. For example, some violations are considered less serious and are not considered misconduct. These include mere inefficiency, poor performance as a result of inability, disregard or ordinary negligence in an isolated instance, good faith error in judgment or discretion.
Improper or unlawful acts committed by an employee during non-working hours and away from company premises can be considered misconduct; however, it is important to note that the misconduct must be connected to the work. For example, the off-duty conduct must injure or tend to injure the interests of the employer.
Develop Best Practices
You can take steps to ensure a higher degree of unemployment insurance success by implementing the following: provide an employee handbook with proof of receipt, post rules on bulletin boards in common areas, or communicate through documented meetings, e-mail, or your company Web site.
Document verbal and written warnings as well as any suspensions. In the case of a suspension, be sure to document when the suspension will begin and when the employee is required to return to the workplace. Document incidents by including the time, dates, and details of what took place. It is extremely important to document any incident as soon as possible while the details are still fresh. When dealing with a poor performance situation, it is important to consider if the employee's poor work performance was due to simple inability. Document what steps were taken to assist the employee such as training or job reassignment, and make a note about whether or not the employer made any effort to improve or change the performance. If the employee does not have the skills, training, or experience necessary to do the work, did the employee falsify his or her qualifications on the initial work application?
If an employee's dismissal is necessary due to poor work performance rather than intentional misconduct, the employee is usually eligible to receive unemployment benefits. The responsibility is placed on the employer to make the best possible hiring decisions.
Best Practices Pay Off
Taking time to complete the necessary documentation will assist UCS in protesting the claimant's unemployment claim for benefits. When a former employee files for unemployment benefits, UCS will request the documentation your company has completed, which will be vital to protest the claim and prove misconduct issues connected to the work. By proving your case and disqualifying the claimant for unemployment benefits, your company will avoid tax liability.
As professionals in the unemployment insurance field, UCS is dedicated to minimizing our clients' unemployment costs. Please contact your ADP-UCS Client Service Representative for any additional information regarding claim management or our unemployment compensation service.
Legislative Highlights
Emergency UC Update
President Obama signed HR 3548 into law on November 2, 2009, providing additional emergency unemployment compensation (EUC) to long-term unemployed individuals. EUC is 100% federally funded and the program is due to expire on December 31, 2009, unless legislation passes extending the program. HR 3548 includes the following provisions:
- Changes the maximum amount of available EUC Tier Two weeks from 13 to 14 weeks
- Adds EUC Tier Three consisting of up to 13 weeks of benefits for claimants in states where the unemployment rate for three consecutive months is greater than 6%
- Adds EUC Tier Four providing up to an additional six weeks of benefits for claimants in states where the unemployment rate is 8.5% or higher for three consecutive months
- Extends the Federal Unemployment Tax Act (FUTA) tax surcharge of 0.2 percent, which was due to expire at the end of 2009, through June 30, 2011. The FUTA tax will remain at 6.2%, however, employers that pay their state unemployment insurance tax timely receive a 5.4% offset credit resulting in a 0.8% net FUTA rate.
Individuals in high unemployment states could potentially receive up to 99 weeks of benefits before the program expires
- 26 weeks of regular state unemployment compensation
- 34 weeks of emergency unemployment compensation (Tier One and Tier Two)
- 20 weeks of federal/state extended unemployment benefits (also 100% federally funded through 12/31/09 for all experience-rated employers)
- 19 weeks of emergency unemployment compensation (Tier Three and Tier Four)
Washington Change in Benefit Charge Summary
Legislation passed back in 2005 changed the way that the Washington Employment Security Department (ESD) calculated a claimant's weekly benefit amount by using the claimant's average earnings for the two highest paid calendar quarters. However, the method of charging employers for these benefits remained the same using the claimant's average earnings over the entire year. The U.S. Department of Labor determined that this practice was not in conformity with federal law and that employers were not always being charged for the total amount of benefits paid to former employees.
In response, the ESD has made adjustments to employer charges from July 2005 to present and notified affected employers. The amount of benefit charges against an employer's account directly affects an employer's unemployment insurance tax rate.
To soften the impact on employers, the state enacted legislation earlier this year (HB 5963) reducing employer tax rates. Each year, employers receive their annual tax rate notices from the ESD in December. For additional information on this change, visit the agency Web site at http://www.esd.wa.gov/uitax/whatsnew/index.php#ssb5963 or contact the Experience Rating/Benefit Charging unit at 360-902-9670.
UWC Holds Employer Conference in Chicago
Strategic Services on Unemployment and Workers' Compensation (UWC) is the only national organization focused exclusively on representing business in unemployment and workers' compensation legislation and policy at both the federal and state level. The 2010 National Unemployment Insurance (UI) Issues Conference will be held on June 22 - 24, 2010, in Chicago. The National UI Issues Conference is the only national conference on unemployment insurance focusing on the concerns of the employers who finance the system. Planned by business, for business, this conference explores the major UI issues that businesses face every day. Registration details and additional information is now available on the UWC Web site http://www.uwcstrategy.org.
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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
For even more information about our products and services, please visit our Web site at www.adp.com .