HR- Unemployment Insurance Claims- Are They Worth Disputing?
It's probably no surprise to hear that unemployment insurance claims have been and continue to be extraordinarily high. What may be a surprise, though, is the record number of claims that are being disputed by employers and state agencies. More than a quarter of ex-employees who apply for unemployment benefits are being challenged by their former employers. The appeals have been so high in fact, many states have encountered a severe backlog problem, resulting in the implementation of Saturday hearing schedules.
Unemployment compensation programs are administered by states and funded by payroll taxes that employers are required to pay (SUTA taxes). In 2007, employers paid approximately $31.5 billion in taxes. In most states, an employer's tax rate is based on an "experience rating" system. In this type of system, any benefits paid to former employees count in their rating, driving up future SUTA costs. Generally experts agree, if businesses lose even one contestable claim or one claim goes unanswered- employers wind up paying higher taxes. Small businesses can get hit extremely hard by UI claims. If they have 50 employees or less, even 1 person drawing unemployment can quadruple their tax rate.
I think we can all agree that unemployment insurance benefits are intended to temporarily help workers who lose their jobs through "no fault of their own". The benefits were not intended to take care of people who don't want to work. Most employers usually don't object to paying benefits to deserving ex-employees. What employers do object to is what they believe to be fraud and abuse in the system. Granting benefits to undeserving claimants and putting the burden of proof on the employers creates a tremendous amount of pressure on businesses. Many companies feel the hassles of disputing a claim isn't worth the fight- as UI claims can be very difficult to win.
SUTA taxes can be a big expense for many businesses. To keep costs down, disputing an unemployment claim may be a necessary evil. If employers are willing to follow a few key steps, though, the probability of prevailing in unemployment matters can be improved. A comprehensive company policy, proper recording keeping and documentation and appropriate disciplinary action can all help businesses win cases.