For those of you who have read my bio, you will see that while I have been at TALX for a number of years, I have only been directly involved in the Unemployment business since May of 2008. Having been with TALX and having worked closely with the Unemployment Cost Management business leaders, I thought I knew what this business was all about. I mean seriously, a claimant files for unemployment, the employer responds with details about the circumstances behind the separation and the state decides. Simple - right?

Well maybe that is the general process, but it wasn’t until I started trying to really dig in to understand the business that I realized the error of my ways, or rather thoughts. On the surface, yes, the process is, claimant files, employer responds and state decides. However, how they file depends on the state in which they live, and what information the employer should provide depends on the state in which they operate. Whether or not the claimant will receive benefits for their particular situation depends, again, on the state.

Why so complex? Well, the states all run their own Unemployment Insurance (UI) programs. An employer pays taxes to both the Federal government and the State government. The Federal tax is used by the Department of Labor to, among other things, fund programs such as UI Modernization, make loans available to the states when their trust fund balances are low and provide incentives to encourage states to make certain legislative changes.

The state tax, the calculation of which again varies by state and is based on different factors by state, is used to pay benefits to claimants, cover administrative costs and cover socialized costs, which are benefits that are not directly charged against a specific employer. An example of a socialized cost would be unemployment benefits paid to former employees of a company that has gone bankrupt.

Given the complexity of the system, it is not surprising that claimants and employers are both confused. This confusion unfortunately adds to an already stressful situation. Whether you are a claimant or an employer, it is important to know the rules in your state. As a claimant, it could mean the difference between obtaining benefits or not. As an employer, not knowing the rules could result in paying unnecessary taxes. At the end of the day, the UI program is there to ensure that those claimants who are due benefits under the state’s program receive them and those claimants that are not due benefits under the state’s program do not.

Again, make sure you know the rules, your rights and your responsibilities.

Tammy Mullin