UI Forum (ADP Unemployment Group)

Second Quarter 2016

Best Practices to Help Reduce Unemployment Insurance Charges

Before 2013, state unemployment agencies often incurred financial burdens due to the way unemployment insurance (UI) benefits were administered. It might have played out this way:

  • A claimant would be awarded benefits based on information provided to the state agency by both the claimant and the employer. The claimant would begin collecting benefits immediately.
  • If the employer filed an appeal, a hearing would be scheduled, often many weeks later.
  • If, as a result of testimony and documentation, the UI payments are reversed, the claimant would have been overpaid.
  • The employer’s account would be credited in full, and the state agency would pursue the overpayment with the claimant.

The result was that many of these overpayments to claimants were never recovered by the states. The federal government passed legislation in 2011 to help rectify the situation (see http://wdr.doleta.gov/directives/attach/UIPL/uipl_2_12_acc.pdf). This legislation mandated compliance by each state’s UI agency by October 2013.

In short, the employer’s account will be charged when both of the following are true:

  • UI benefits were improperly paid because the employer (or their agent) failed to respond in a timely and adequate manner to the agency’s request for information related to UI; and
  • The employer (or their agent) has established a pattern of failing to respond to such requests in a timely or adequate manner.

In other words, if a state UI agency determines that the employer’s original response was inadequate and/or untimely and a pattern had been established, the employer will not be eligible for collecting the overpayment that was created. That amount will instead be charged to the employer’s UI account and factored into determining subsequent tax rates—even if the employer prevails at a hearing!

Each state’s legislation must meet U.S. Department of Labor (DOL) standards, which requires employers and agents to provide timely and accurate responses. However, it’s important to note that the interpretation and application of this criteria can and does vary from state to state.

What’s Your Best Approach?

Following are some HR best practice recommendations for handling unemployment claims administration:

  • When you are contacted by your ADP Unemployment Group Customer Service Representative, provide all details and supporting documentation. This includes, but is not limited to:
    • Resignation letters
    • Witness statements
    • Relevant warnings
    • Company policy with acknowledgement
    • Details of the final incident
    • Drug test results
  • Always provide this information as soon as possible (but definitely by the deadline provided to you).
  • In the unlikely event you should receive a claim or phone inquiry directly from the UI state agency, contact your ADP Unemployment Group Customer Service Representative immediately for advice and direction.

By following these best practices and working with your ADP representative, you can help keep many unnecessary charges at bay. For more background and information about this federal legislation, visit http://wdr.doleta.gov/directives/attach/UIPL/uipl_2_12_acc.pdf.

State Unemployment Law Updates

Several states have enacted recent law changes that you should understand:


The Massachusetts Department of Unemployment Assistance (DUA) advised ADP that their agents will no longer make a second request for information when the initial fact-finding notice is not returned to the agency.

In the past, DUA would make a second attempt for information when they had not received a response on a disputed claim. This policy change should not be confused with the DUA’s contact with ADP.

The bottom line: It’s even more important to adequately respond to all requests for information from ADP in a timely manner. Please direct any questions to your Account Manager or CSR.

NOTE: The information about Massachusetts was provided via a phone call to the Government Relations team. There is no specific citation for this information.


The Michigan Unemployment Insurance Agency (UIA) amended its law effective May 23, 2016, to clarify the relationship between a franchisee and franchisor. The law is as follows:

“Except as specifically provided in the franchise agreement, as between a franchisee and franchisor, the franchisee is considered the sole employer of workers for whom the franchisee provides a benefit plan or pays wages.”

More information can be found at: http://www.legislature.mi.gov/(S(i3byg11xdrtjfjncvcegar3z))/mileg.aspx?page=getObject&objectName=mcl-408-471-amended


On March 1, 2016, Wisconsin enacted SB-422. This law defines the employer/employee relationship between a franchisor and franchisee. For purposes of certain employment-related laws, this signed bill excludes the franchisor as the employer of a franchisee or an employee of a franchisee.

This law applies to workers’ compensation, UI, minimum wage, payments and work discrimination. It applies unless either of the following conditions exists:

  • The franchisor has agreed in writing to assume that role; or
  • The franchisor has been found to have exercised a type or degree of control over the franchisee or the franchisee’s employees that is not customarily exercised by a franchisor for the purpose of protecting the franchisor’s trademarks and band.

To read the full bill, visit http://docs.legis.wisconsin.gov/2015/related/acts/203.pdf.

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