Unemployment Insurance (UI) rates have been dropping over the last year and that is great news for the economy, however, it does not mean that these costs are not a significant percentage of your payroll – especially if you are in the Temporary Staffing Industry.  Because turnover is a fact of life in this business, unemployment costs are higher than in most other industries across the country and controlling those costs is a critical part of being successful (and profitable) in this business.  With that thought in mind, here are some tips for controlling (and even lowering) your UI costs.

• Use a UI Cost Management database of some sort – Temporary Staffing Companies have hundred, thousands, or in some cases even tens-of-thousands of UI claims each year.  Managing claims, protests, charges, and tax rates using spreadsheets or on paper means you are spending far too many hours handling this process.  Extra labor managing this process means extra labor costs and even if you are only dealing with hundreds of claims each year – manual processes are incredibly inefficient so you are likely “flushing money down the toilet”.  A UI database (whether you use a software already on the market or have something custom built) makes this process less time consuming (and labor cost consuming) and more efficient.
• Track your costs by client – keeping an accurate record of your costs of doing business (Unemployment, Worker’s Compensation, Turnover Costs, etc.) by client allows you to be more proactive when the discussion of markup rate arises.  This process can also help you to spot trends that you would not otherwise notice and you can fix problems as they arise (such as specific positions or shifts that are higher in turnover, spotting supervisors or managers who don’t document employee discipline or separation issues, etc.).
• Work with your clients to ensure that you get the documentation you need to fight UI claims – you should be communicating with clients (and potential clients) about how your UI program works and the documentation you may need to protest claims that should not be getting paid (Discharges for cause and Voluntary Quits).  Most good clients will appreciate that you are aware of and actively seeking to manage these processes and they may actually learn from you as well.
• Get educated with the clients rules and expectations – there is nothing worse than working hard to place a candidate with a client only to have the assignment ended due to a violation of a previously unknown rule/policy or due to substandard performance (an expectation of which you were not aware).  Don’t set yourself (or your candidate) up for failure by not asking the right questions up front.  Don’t set your company up for higher UI costs because those questions were not asked.  You can help your candidates succeed by getting the right information about your client and their rules/expectations and by communicating them to prospective candidates (often in a list of those items provided to each candidate placed).
• Use a “Hot List” when considering candidates for placement – on a weekly (or more often) report of your current open UI claims and sort it by “Potential UI Cost” (how much you could end up paying if the claimant collects their entire benefits).  In this way, you have a list of candidates who are already costing you money in UI benefits – so, all things being equal among candidates for a placement, you should place them first (filling an opening and reducing your UI costs).  Just a hint though, filter out those candidates you should not place on an assignment (quits, failed drug screens, etc.).
• Evaluate your employee handbook – I have beat this drum a great deal on this blog, your handbook is the key to managing UI costs.  Make sure it is up to snuff or you will lose protests more often than you should and your profit margins will be lower than they should be.

These are just a few of the ways in which you, as a member of the Temporary Staffing Industry, can better manage your UI costs and improve your bottom line by lowering the costs of doing business.  If you do a truly effective job at this, you could also give yourself an advantage over your competition by giving yourself the opportunity to offer your clients a lower rate (because you have lower costs).