Total Tax
Fall 2008
Managing Unemployment Costs . . . Especially in today’s economy!
Recently, most of us have likely been impacted by the slowing U.S. economy. With daily announcements of downsizing and employee layoffs, the nation's unemployment rate steadily continues to increase. In August 2008, the unemployment rate increased to 6.1%, the highest level since September 2003. That's up from 5.7% in July 2008 and 4.7% a year ago.
How ADP Can Help
Having ADP-UCS process your unemployment claims during a slowing economy can benefit you in more ways than just relieving the administrative burden of responding to the claim. While an unemployment claim may be the result of a work reduction (which is non-disqualifying), some states require employers to provide wage history (in addition to separation information) within a specified time period. Failure to do so may result in monetary penalty. UCS Claim Representatives are well-versed on the various state agency requirements and will ensure compliance for you.
There is also a risk of unemployment claims being filed by claimants indicating they were laid off when, in fact, the situation may have been a disqualifying voluntary resignation or termination. The U.S. Department of Labor estimates more than 9% of all benefit charges are in error. Being charged for these types of erroneous unemployment claims may result in an increased unemployment rate, which cuts directly into your profits. ADP can identify protestable claims and the supporting documentation needed for you to receive a favorable determination from our protest.
Additionally, with the services listed below, we effectively manage all of your unemployment insurance needs:
Pre-Termination Coaching and Counseling
UCS Client Service Representatives can help you make the right decisions prior to terminating an employee.
Unemployment Claims Administration
UCS Client Service Representatives are knowledgeable in state unemployment insurance laws and will prepare the claim response, thus eliminating the clerical burden.
Appeals and Hearings Representation
Win more unemployment hearings with highly experienced representation.
Benefit Charge Audits
Unemployment claim charges directly affect annual unemployment tax rate calculations. UCS will protest erroneous unemployment charges, which may assist with reducing your tax rate.
Tax Rate Notices
UCS will verify the components used in calculating your tax rate.
Employers need to protect themselves from frivolous unemployment claims during these more challenging economic times. In addition, employers need to remain focused on running their core business activities. ADP¬UCS takes away the burden, risk, and challenge of staying on top of the paperwork and legal requirements associated with processing unemployment claims.
For more information on how you can maximize the benefits of your service, visit our Web site and go to Tax Compliance Information & Resources > Unemployment Compensation.
The Importance of Information
Proper documentation is pivotal for success in unemployment claims management. Providing the complete details of a discharge, including information on policy violations and infractions, can mean the difference between a favorable or unfavorable ruling on your behalf. Take a look at the following case.
The Claim
After a large, multiple-location company discharged an employee, the subject’s personnel file was sent to the centralized Human Resources (HR) department. Unfortunately, the unemployment claim arrived fi rst. A company HR representative responded to the claim, without the benefit of supporting documentation from the claimant’s file, stating only that the reason for discharge was a policy violation. The employer received an unfavorable determination.
The Appeal
The company appealed the decision maintaining that the claimant was discharged because of a verbal altercation on the job and that the employer had a policy prohibiting such behavior. While a copy of the company policy was included with the appeal letter, the letter itself did not contain information about previous counseling sessions with the claimant for similar incidents, nor did it indicate that the claimant had been given a final written warning four months prior to discharge. Also, the appeal letter failed to mention that the employer had several witnesses to the fi nal incident and that the verbal altercation included racial epithets directed at a customer.
The Hearing
When the notice of a hearing arrived, the employer contacted ADP for assistance. ADP reviewed the issues, prepared the witnesses for testimony, and assembled the documentation as exhibits for the company’s defense. An ADP representative attended the hearing with the employer.
At the hearing, the full details of the case fi nally emerged. Two employees repeated statements the claimant made to them about the customer, and other company witnesses testified that the discharged employee had been counseled about his language and demeanor. Also, it was shown that the claimant knew the employer’s policy regarding acceptable language. Records of the previous counseling sessions, the company policy statements, and a statement signed by the claimant acknowledging receipt of the policy handbook were all submitted as exhibits.
Additionally, it was established that the employer had fully adhered to its policy of progressive disciplinary action before resorting to the termination.
The claimant had no defense to the testimony and the documentation that was presented.
The Decision
The Administrative Law Judge found in favor of the employer, concluding that the claimant had been involved in misconduct related to the job and that, at the time of this misconduct, he was aware that his employment was in jeopardy.
The Final Word
Always start with a good defense. Having complete and full documentation of events leading to a discharge, written proof of policy violations, and any available witness statements that are submitted when you first respond to a claim can save time and reduce the amount of work it takes to win a favorable decision.
NEW LEGISLATION
Federal Emergency Unemployment Compensation
President Bush signed HR 2642 into law on June 30, 2008, which included the Emergency Unemployment Compensation (EUC) program. This program allows claimants up to 13 weeks of additional benefi ts when they meet the following eligibility requirements:
- Must have a filed claim for regular state unemployment compensation benefi ts with an effective date on or after May 6, 2006
- Must have exhausted all rights to regular state unemployment compensation benefits
- Must have exhausted all rights to any other federal unemployment compensation benefits
- Must not be receiving compensation under the unemployment compensation law of Canada
- Must have had 20 weeks of full-time insured employment or the equivalent in insured wages in their original base period, as determined under the provisions of the state law
Claimants will receive a weekly benefi t amount equal to the amount received during their benefit year under state law, including any dependent allowance. Benefits are payable beginning with the week ending July 12, 2008, and will not be paid for any week beginning after June 30, 2009. The benefi ts payable under the EUC program are 100% federally funded and have no impact on the state unemployment insurance (UI) trust fund or employer UI tax rates. However, state UI agencies may need to request separation information from employers to determine eligibility for EUC in cases where the claimant has worked and separated employment since exhausting regular UC benefi ts, but cannot yet qualify for a new benefit year under state UI law.
For additional information on the EUC program, please visit the U.S. Department of Labor Web site at http://workforcesecurity.doleta.gov/unemploy/supp_act.asp.
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 .