The headlines scream at us almost daily that the unemployment rate is rising, and that businesses are shedding jobs. More employers are receiving unemployment claims, causing their experience ratings to be re-evaluated and their tax rates to rise.
In these tough economic times, it is important for employers to understand the ins and outs of unemployment claims.
Terminations or reductions in force:
Although a termination or reduction in force (RIF) can’t always be avoided, it is important that employers do everything they can to minimize their liability and manage their claims.
After the RIF or termination, you will receive a Claimant’s Separation Statement from the Employment Security Department (ESD). If you RIF’d the employee due to lack of work, you cannot fight the claim, and only need to return the form if it contains any errors.
There is nothing you can do to prevent this claim from affecting your tax rate.
Terminations for cause:
If you terminated the employee for cause, complete the form.
The key to successfully making your case is to provide as much information and detail as possible, as quickly as possible. You should always maintain as much documentation as you possibly can, and give as many details as you are able when filling out the form.
You must return the form by the date indicated on it (usually about 10 days from the date it was mailed). If ESD calls for follow-up information, again, remember that it is crucial to provide lots of documentation and detail in a speedy fashion.
Will your account be charged for an employee who quits working for you?
It’s possible, yes. The answer depends upon whether or not the employee’s reasons for quitting are attributable to you.
Reasons that are NOT attributable to you when an employee quits include:
- Resignation for a legitimate job offer that ends up falling through
- Relocation with a spouse who is transferred
- Resignation due to the illness or death of an immediate family member
- Resignation to protect themselves or an immediate family member from domestic violence or stalking.
Circumstances such as these are not attributable to you, the employer, and generally your account won’t be charged. If it is, you should request relief of the benefit charges.
Reasons that ARE attributable to you when an employee quits include:
- A change in the worksite which materially increases an employee’s commute or difficulty of travel
- A deterioration of worksite safety that has been reported to the employer and which the employer has failed to rectify in a reasonable period of time
- A change in the employee’s job that violates their religious convictions or moral values
When an employee resigns for reasons that are attributable to you as the employer, your account will be charged.
Note: In this economy, many employers are also learning that they are responsible for unemployment benefits when employees’ hours or wages are cut by 25% or more.
Do you have to pay unemployment on an employee you terminated for good cause?
Surprisingly, the answer may be yes.
ESD’s guidelines about the definition of “cause” are simultaneously very specific and troublesomely vague. ESD only allows you relief of charges for “misconduct or gross misconduct”—but the definition of that is murky and up to the State.
Behavior that was termination-worthy to you may be considered by the ESD adjudicator to actually be something that was beyond the employee’s control.
For example, the ESD deems failing to grasp certain aspects of a job or being a poor fit for a position as an “inability to meet the minimum job requirements,” which is something that is beyond an employee’s control. Similarly, an employee who has repeatedly called in absent due to having a sick child at home also falls outside the ESD’s definition of misconduct.
Even if an employee was terminated for actual misbehavior, the adjudicator can still put the burden back on you by deciding that you failed to provide warnings about the consequences of the transgression, and that you did not give the employee sufficient opportunities to change prior to the termination.
In all of these circumstances, the employees will be entitled to their unemployment.
What can you do to protect yourself?
It is vital to keep great records so that you can prove the validity of your claims to the adjudicator when it comes down to your word vs. the employee’s.
It is also important to have a good, thorough Employee Handbook to prove that the employee was fully aware of your company’s policies on misconduct.
Notice to Base Year Employer forms
Many employers are unaware that they need to pay attention to the Notice to Base Year Employer forms they receive from ESD.
These forms arrive when a former employee has been separated from their next employer. The form appears to be informational in nature, and can list one or more former employees on it. Sometimes employers read it, and file it away, or toss it out.
In actuality, this form is notifying you that a former employee has filed for unemployment benefits and that your account will be charged, unless you respond within 30 days.
The Notice to Base Year Employer form shows:
- When someone worked for your company
- Wages reported
- The percentage of their unemployment that you’ll be charged, which could be as high as 100%
Even though it comes with no form to fill out or questions to answer, you need to provide the same information that you would on a Separation Statement questionnaire. You can do this via a letter, a fax, or by writing on the form and returning it.
If you don’t respond, your account will automatically be charged.
How can you handle the slowdown without your tax rate taking a hit?
In this volatile economy, many companies are finding that their staffing needs are fluctuating. It’s often hard to tell if business has stabilized to the point that an employee can be hired permanently onto the payroll.
If you are a small company and hire someone, only to let them go in a few months, you will be liable for their unemployment. When companies are smaller, RIF’ing an employee causes the business’s tax rate to take a bigger hit.
- Shared Work Program: If you’re experiencing a business slowdown, but are trying to hold onto your skilled workforce, Washington offers a Shared Work Program through ESD which provides unemployment benefits when a company reduces staff hours across the board.
This program accommodates work units whose employees are working 20-36 hours a week. The employees receive a percentage of their unemployment benefits corresponding to their percentage cut in hours.
The company has to apply to ESD to be accepted into the program. More information is available at ESD’s website.
- Staffing companies: An effective solution is to hire employees through a staffing company. The staffing company bears the liability for the employees, and you can use them only when you need them.
If you hit another bump in the road, you can lay people off without bearing any of the liability in your company. If your needs stabilize, you can take the employees onto your payroll.
- Rehire former employees: You can control your unemployment costs by rehiring former employees who are currently on unemployment.
Place good former employees on the top of your list of prospective job candidates, and if you have a need, make those people priorities for job offers. Anyone collecting unemployment benefits has a responsibility to seek work and accept a suitable offer of work.
Where can I find help locally with navigating the unemployment system?
The unemployment system can be quite cumbersome, and finding answers to questions can be next to impossible.
It’s difficult to get the same person on the phone twice, and even the Director of Employment Security, Karen Lee, has admitted to us that any two claims adjudicators can make two different decisions on the same case. Unfortunately, ESD’s website provides much more information to employees seeking benefits than it does to employers seeking answers.
But recently, progress has been made!
Kathy DiJulio has been hired as the small business liaison. If a business has a problem or needs training, she’s the person to call. She can bring trainers in to a company, industry association, or business group such as a Chamber.
Kathy can be reached at (360) 902-9663.