Well, it is getting close to tax time for most businesses and Americans – it is also getting close to the time when most companies receive their new (2015) unemployment tax rate notice.  Many companies will then suffer through something that I like to call “UI tax rate sticker shock” – their new tax rate will have risen more than they thought and likely more than was budgeted.  For many employers, unemployment taxes have become the second highest employer tax, right behind FICA.

A high percentage of employers feel that UI taxes are a cost of doing business – never understanding that unemployment is a controllable expense and can be significantly reduced if the right amount of knowledge and effort are put into it.  So how do employers control and reduce their UI Tax Rate?  Well, here are a few tips – for more information, contact us at info@unemploymenttracker.com:

• Use work-sharing programs. A state work-sharing program may make it cheaper to keep employees on at reduced hours than to lay them off. For example, Florida prorates unemployment benefits for employees whose hours and pay have been reduced to avoid total layoff.
• Document unsatisfactory work performance. If you contest an unemployment claim, you need proof of the employee’s unsatisfactory work or misconduct so be certain that your policies and documentation are up to date and effective.
• Keep accurate, complete records. You may protest the awarding of benefits, your share of liability, or your tax rate, but in order to do so, you must have accurate records to back up your protest.
• Verify each statement of benefits charged to your account. Promptly answer requests for information to avoid unnecessary benefit charges. Follow up to make sure that corrections are made and penalties are not assessed.  Be certain to compare charges to your account against your payroll records – often, active employees are claiming unemployment or employees working less than full time are not claiming the correct wages – these can lead to thousands of dollars in overcharges each week.
• Appeal claims decisions promptly – don’t miss the protest deadline or you will not be able to stop unwarranted charges to your account.
• Don’t turn a voluntary termination into a discharge. If you do, the worker will then qualify for unemployment benefits.  In other words, if the claimant quit or was a no call no show – be sure you don’t use words like terminated, discharged, etc.  Suddenly the Agency will begin looking at the separation as a termination instead of a quit.
• If you are expanding into a new state or purchasing a company – be sure you know about the UI tax rate and costs in that state (or for that company). Don’t fall victim to surprises on the UI cost side of the expansion or purchase.  It can cost you significant money if you don’t do your due diligence.
• Pay extra tax. Make voluntary contributions to your reserve account. How this pays off: Generally, your company’s unemployment tax rate depends on the status of your reserve balance. That’s the amount of tax you pay less unemployment claims. A voluntary contribution to boost your reserve balance could result in a lower tax rate—and the savings might exceed the amount of the extra contribution.

These are just some of the ways in which you can have a positive effect on your UI Taxes (and on your costs to operate).  There is no reason you can’t control these costs and stop paying money you should be saving.