UI Forum (ADP Unemployment Group)

First Quarter 2013



Severance Pay Impact on Unemployment Benefits

Severance pay is typically a type of employer-paid benefit given to workers in conjunction with a layoff or some other separation from employment. It is a contractual agreement between the employer and employee, and is not required by statute or regulations. An employer may elect to pay severance based on established company policies or special circumstances; most often the amount paid is based on a worker's years of service. Since severance can result in deductions to or disqualification from federal and/or state mandated unemployment benefits, it is important for employers to maintain good records and be able to provide accurate information about such payments when necessary.

Unemployment Insurance (UI) laws’ treatment of severance pay vary by state; many regard severance pay as "wages" or "remuneration." Typically, an individual cannot collect wages and UI benefits in the same week, consequently, receiving severance pay can affect the benefits an individual receives. California, Illinois, Kentucky, Mississippi, Missouri, Montana, New Jersey, New York, Oregon, Rhode Island, South Carolina, Texas, Washington, and West Virginia however are all states where the receipt of severance pay does not reduce or disqualify an individual from receiving UI benefits.

The amount and duration of severance pay dictate the degree to which benefits are impacted. For example, in Ohio, if the employer notifies the unemployment agency that severance will be allocated over a period of weeks, the individual will be ineligible for UI benefits for those specific weeks. On the other hand, if the employer pays all severance on the last day worked by the individual, it will not impact UI benefits.

Severance pay details are as important as separation information in the unemployment claim process. Providing your ADP Unemployment Group representative with all requested information can help you achieve optimal results in managing your unemployment costs.

Federal Unemployment Benefits Extensions Continue Through 2013

Provisions in The American Taxpayer Relief Act, signed into law on January 2, 2013, extend federal Emergency Unemployment Compensation (EUC) until December 28, 2013. The new legislation does not add any additional weeks of benefits; it simply extends the time period in which an individual may potentially collect EUC, if he or she is still unemployed after exhausting all regular unemployment payments.

There are four tiers to EUC which remain unchanged from 2012 levels. Available weeks of benefits and the threshold for each tier are as follows:

Tier I 14 weeks No TUR* Threshold
Tier I 14 weeks In states with a TUR of 6% or greater
Tier III 9 weeks In states with a TUR of 7% or greater
Tier IV 10 weeks In states with a TUR of 9% or greater

*TUR: Total Unemployment Rate; the three month average, seasonally adjusted, for the three month period ending prior to the current month.

The total weeks of benefits potentially available to an individual is 73, assuming he or she is eligible for and collected a maximum of 26 weeks of regular unemployment benefits and 47 weeks of EUC.

Emergency Unemployment Compensation is 100% federally funded, so employers are not liable for payments made under the program. The Act also provides for 100% funding of state Extended Benefits (EB); however, all states are currently triggered off of EB, a sign of improving unemployment rates.

There is no phase out period for EUC, meaning all payments will cease when it ends on December 28, 2013.

Hurricane Sandy Disaster Unemployment Assistance Deadline Expires Soon

The deadline to file a claim for Hurricane Sandy-related Disaster Unemployment Assistance (DUA) expires on February 4, 2013. Disaster declarations were issued following the October 2012 "Super Storm" for Connecticut, New Jersey, New York and Rhode Island.

Affected workers may be eligible for DUA. This federal program provides financial assistance to individuals whose employment or self-employment has been lost or interrupted as a direct result of a major disaster declared by the President of the United States, and who are not eligible for regular Unemployment Insurance (UI) benefits.

This assistance is available to individuals for weeks of unemployment beginning after the date the major disaster began and for up to 26 weeks after the disaster declaration, as long as their unemployment continues to be due to the disaster.

Because DUA benefits are allocated from the federal Disaster Relief Fund, an employer's unemployment account is not charged. Keep in mind, though, that DUA is only available if an individual is not eligible for regular UI benefits first. Relief of charges for benefits paid under the regular UI program for loss of employment due to a natural disaster varies among the states.

New Jersey and New York do not have specific disaster relief of charge provisions in their UI laws, while Connecticut does. Rhode Island will grant relief of charges to eligible businesses who first call the agency at (401) 462-8999 or send an email to uiemployerhelp@dlt.ri.gov to submit a "waiver and relief application."

The application period for filing DUA claims related to Hurricane Sandy began October 26, 2012, and the deadline was extended to February 4, 2013.

Impacted individuals may find complete details online about DUA for the impacted states as follows:

Connecticut: http://www.ctdol.state.ct.us/communic/2012-11/11-9-12%20Disaster%20UI%20applications%20for%20Hurricane%20Sandy%20deadline%20extended%20to%20Feb%20%204%20_2_.pdf

New Jersey: http://lwd.dol.state.nj.us/labor/ui/aftrfile/dua.html

New York: http://www.labor.ny.gov/formsdocs/ui/P814.pdf

Rhode Island: http://www.dlt.ri.gov/ui/Sandy.htm

SIDES Update

The State Information Data Exchange System (SIDES) for unemployment claims continues to be a success between the ADP Unemployment Group and state agencies. We are currently live with SIDES in 21 states - AZ, CO, DC, GA, IA, ID, KS, MO, MS, NC, NJ, ND, NH, OH, OR, RI, SC, TN, TX, UT, WI – and expect to be live with additional states by the end of 2013.

SIDES is a secure, web-based, electronic exchange system enabling a two-way transmission of claims and separation information responses between states and the ADP Unemployment Group, via a uniform format. Benefits include:

  • Electronic claim delivery increases the lead time for you to gather complete separation details.
  • Inaccurate benefit charges to your unemployment account may decrease, through better information provided on the initial claim.
  • Personal information of former workers is more secure through reduced handling of paper documents.

Should you have any questions about SIDES, please feel free to contact the ADP Unemployment Group at 888-805-5142 and ask to speak with a Client Relationship Manager.

UI Benefit Maximum Duration Reduced in Seven States

Seven states have reduced maximum durations of regular unemployment insurance (UI) benefits.

Benefit amounts and duration have historically been left to each state to determine. Since the 1990's, all states paid at least 26 weeks of UI benefits to eligible claimants. However, due to insolvent UI trust funds that still exist in this post-recessionary economy, state legislatures are trending toward cutting the maximum benefit duration as part of the solution in managing the flow of revenue in and out of UI trusts. The following table details those states with UI duration reduction laws.

State Maximum Duration Weeks Effective Date
Arkansas 25 2011 - July
Florida 12-23* 2012 - January
Georgia 20 2012 - July
Illinois 25 2012 - January
Michigan 20 2012 - January
Missouri 20 2011 - April
South Carolina 20 2011 - June

*A range based on average unemployment rate

Email Phishing Scam Alert

State Unemployment Insurance agencies are cautioning employers about an unemployment email phishing scam brought to their attention, which specifically targets employers. Florida, Idaho, Montana, New Hampshire, New York and Tennessee were some of the first states to become aware of deceptive emails being circulated to businesses under the guise of "Unemployment Assistance."

Should you receive an email offering unemployment assistance, it could very well be considered a phishing scam, and may not be connected to any state UI program. It is always prudent to exercise caution when opening any email or link from a sender that you do not fully trust or recognize. Best practices indicate to delete any email you do not recognize and request technical support if you have opened such an email.

State Updates

Arizona
Arizona UI statutes were amended with regard to work search, suitable work, and criteria to establish a valid claim as follows:

  • Individuals must engage in a systematic and sustained effort to obtain work at least four days of the week and must have made at least three work search contacts during the week; it disqualifies an individual from continuing to receive benefits if the individual fails to actively engage in seeking work.
  • An individual is considered to have refused an offer of suitable work if an offer of work is withdrawn by the employer after the individual either: 1) tests positive for drugs after a drug test given by an employer, or on behalf of a prospective employer as a condition of employment; or 2) the individual refuses, without good cause, to submit to a drug test that is required by a prospective employer as a condition of an offer of employment.
  • The amount the individual must have been paid for insured wages in one calendar quarter increases from at least $1,500 to at least $2,983.50 to qualify for a claim.

Additionally, the deadline for appealing a hearing decision issued by an Administrative Law Judge has increased from 15 to 30 days. The appeal period for: (1) for a tax liability determination has been increased from 15 to 60 days; and, (2) a notice of refusal to grant relief from a reconsidered tax liability determination has increased from 15 to 30 days.

Also, the definition of employee has been expanded to better clarify who is an employee covered under the UI system and who is an independent contractor. The new statutory language in Section 23.613.01 is underlined below:

  • "Employee" means any individual who performs services for an employing unit and who is subject to the direction, rule or control of the employing unit as to both the method of performing or executing the services and the result to be effected or accomplished.

    Indications of control by the employing unit include controlling the individual's hours of work, location of work, right to perform services for others, tools, equipment, materials, expenses and use of other workers and other indicia of employment."

Finally, legislation effective August 3, 2012 amended Arizona law regarding Unemployment Insurance (UI) benefit eligibility. As amended, employees of public schools and for-profit charter schools are ineligible for UI benefits for a recognized break in or between academic terms, if there is a reasonable assurance that the employee will have the same or a similar job following the break. Previously, this law did not mention charter school employees.

Idaho
The maximum weekly unemployment benefit amount effective January 1, 2013, has increased from $343 to $357.

Massachusetts
As of October 7, 2012, the maximum weekly benefit amount range has increased from $653-$979 to $674-$1,001. This is dependent upon whether or not the claimant receives a dependency allowance.

Missouri
The Appeals Tribunal is now conducting all of its telephone hearings via a teleconference bridge system. Employer witness phone numbers no longer have to be called into the Tribunal in advance of the hearing date and time, rather the bridge conference number is now listed on the Notice of Hearing for participating parties to call. The rules under 8 CSR 10-5.030 have been amended to reflect the use of a telephone conference bridge system.

Minnesota
The maximum weekly benefit amount has increased from $597 to $610 as of October 28, 2012.

North Carolina
An amended definition of misconduct went into effect November 1, 2012. New language is underlined:

  • Misconduct connected with the work is defined as conduct evincing a willful or wanton disregard of the employer's interest as is found in deliberate violations or disregard of standards of behavior which the employer has the right to expect of an employee or has explained orally or in writing to an employee or conduct evincing carelessness or negligence of such a degree or recurrence as to manifest an intentional and substantial disregard of the employer’s interests or of the employee’s duties and obligations to the employer.

Ohio
Effective for claims filed on or after December 30, 2012, the maximum weekly unemployment benefit amount has increased as follows: from $400 to 413 for a person with no dependants, from $485 to 501 for a person with one or two dependants, and from $539 to 557 for a person with three or more dependants.

Tennessee
Comprehensive UI reform is now in effect. Of importance is a stronger "misconduct" definition, which could help employers prevail when contesting discharge claims.

Additional changes to the unemployment laws include:

  • Benefit disqualification for persons incarcerated our or more days in a work week.
  • Benefit disqualification if the person receives severance pay or wages in lieu of notice.
  • Benefit disqualification if an offer of work is withdrawn by an employer, due to a person’s positive drug test result, or the individual's refusal to submit to a drug test.
  • Redefining "suitable work" so that the longer a claimant is unemployed, the less a new job would need to pay in order to constitute "suitable work."

Texas
The maximum weekly benefit amount increased from $426 to $440 as of October 1, 2012.

Utah
The maximum weekly unemployment benefit amount has increased from $467 to $479, effective January 6, 2013.

Try our new Payroll Price Quote Tool

Call 1.800.CALL.ADP,
ext. 411

Find the ADP products and
services that best fit your
company's needs.