3 Ways to Save Time & Money on Unemployment Claims with HR Outsourcing

Unemployment claims can be time-consuming and tedious, especially considering a single claimant can cost a company quite a bit of cash. Many business owners are not equipped to handle unemployment matters for a number of reasons, whether it’s a lack of experience or a lack of staff.

Here are a few recent unemployment claim statistics:

• The average claimant in 2019 collected $378 every week in benefits..
• The average claimant in 2019 was in the program for 15 weeks.
• In all, $27.4 billion was paid to beneficiaries in all programs from March 2018 - February 2020.
• The COVID-19 crisis of 2020 has spiked unemployment rates, increased benefits, and extended program duration dramatically..

In addition to the already high cost of unemployment claims, many business owners overpay claims. Many also don’t know that their unemployment tax rate largely depends on the number of past unemployment claims against the business. While employers can’t really control whether an employee files a claim, they can take steps to reduce the risk of unqualified claims being levied against them.

Here are some tips for proactively protecting a business of any size:

1. Outline clear expectations by having detailed job descriptions, a comprehensive employee handbook and clearly outlined policies and procedures. Have employees sign off as documented proof of acknowledgment.
2. Keep accurate and complete records because specific facts and documentation are usually necessary to support the case. This includes things like reports of unsatisfactory work or misconduct, documentation of all warnings or discipline and the employee’s acknowledgment of policies. Have witnesses sign off on all written documents along the way and keep the information in a safe place.
3. Answer all correspondence and contest claims right away when eligibility is in question. The state will contact an employer when a former employee files for benefits. Employers should respond promptly and follow up. Cooperating with the state is key to winning a contested claim.
4. Know who is eligible for benefits. All states require that an employee have sufficient wages during a “base period,” which is the first four of the last five quarters prior to the quarter when an employee applies.
5. Know the difference between misconduct and underperformance. Because the system was created to protect someone who is jobless through no fault of their own, someone who was fired from a job for not doing it well can be eligible for unemployment benefits. That’s if it can be proven that he or she was not engaging in “misconduct.” Every state has a different definition, but generally speaking, misconduct indicates that someone was deliberately acting to do harm against the business or someone at the business.

Examples include:

1. Choosing not to perform
2. Committing a dishonest act
3. Refusing to follow a reasonable and justifiable direct order
4. Disobeying a company policy
5. Not acting in the employer’s best interest

Many employers don’t want the headache and choose to outsource unemployment claims administration. Here are three ways human resources outsourcing can save employers time and money when it comes to unemployment claims.

1. HR outsourcing companies help audit claims

Outsourcing unemployment claims to HR professionals means help with auditing claims and deciding which are qualified. That means employers only pay what is owed and not a penny more.

2. HR outsourcing companies advise employers on hearings

Preparing for a hearing requires deep HR experience, which many employers don’t have. There is documentation to submit both before and during the hearing as well as lots of questions to be answered. When small businesses utilize an outsourcing option, they eliminate the burden of unemployment claims by handling the following:

• Becoming the liaison between clients and state unemployment agencies
• Preparing documentation and representing the company and its clients in hearings and appeals
• Creating executive summary reports and presentations
• Reviewing, reconciling and appealing erroneous charges

3. HR Consultants Provide Tax Management and Employment Law Compliance

HR services companies advise employers beyond the claims process with tax management and compliance assistance. Having dedicated HR assistance means employers will be in the know when tax rates change or when contribution savings opportunities arise. Employers can even get advice on various aspects of employment laws including hiring, firing, discipline and healthcare reform.

Here’s a little more information on the unemployment claims process:

1. A worker contacts the state where he or she worked to begin the claims process.
2. That state looks at all of that person’s wages and employers during the base period.
3. If the employee has met minimum work and wage requirements, the state will gather the required information from both the employee and that person’s employers from the base period.
4. Each employer must respond and cooperate with the state’s adjudicator, who will make the decision whether the claimant is eligible for benefits – and determine which employers are responsible for paying on the claim.
5. If either party disagrees with that decision, they can appeal – which results in either a review or an unemployment hearing.
6. If the unemployment benefits are granted, an employee can initially receive benefits for 26 weeks or less depending on their state. (This first round of unemployment is completely funded by the employer – and any monies paid out are charged against the employer’s “experience rating.”)

When you outsource unemployment claims administration to a Professional Employer Organization (PEO) like FrankCrum, you save time, money and a lot of headaches. Call FrankCrum today at 1-800-277-1620 to learn more about the employment services we provide.