Situation

In 2005, due to a law change, the state of Washington changed the way they determined the amount of unemployment benefits claimants were eligible to collect; however, they did not change the way the benefits were charged to each employer. These are the benefit charges used in the employer’s rate calculation. As a result, employers may not have been charged for the full amount of the benefits collected by former employees. It has been determined that this practice is not in conformity with federal unemployment law.

What Employers Need to Know

To make the state benefit charging practices conform to federal law they have made adjustments to benefit charges going back to 2005 that will be used in your 2010 rate calculation. You will be receiving a statement titled "Change in Benefit Charges Summary" detailing the changes made to your specific account.

What You Can Expect

These adjusted benefit charges will only be used in rate calculations for the 2010 rate year and beyond. No amended rate calculations will be made for prior years.

Tammy Mullin

For employers, all unemployment hearings begin with the same initial questions regarding the former employee's employment. The questions, though not apparently crucial to the final outcome, can establish or destroy the witnesses' credibility with the administrative law judge. The questions asked are:

• The former employee's position
• Rate of pay
• First date worked
• Last day worked and last day employed if different

If a witness' testimony is uncertain or incorrect on these basic facts, the remaining testimony may be questioned as to its truth and/or accuracy and credibility.

Unemployment insurance hearings are informal, administrative proceedings designed to be fact-finding, non-confrontational in nature. Though informal in nature, remember that the administrative law judge is responsible for gathering the relevant facts regarding the cause(s) of the former employee's job separation.  Often times, there is conflicting testimony and the administrative law judge will have to rely on who they feel is the most credible.  For more information on unemployment hearings, see What Not to do at an Unemployment Hearing.

Tammy Mullin

Unemployment hearings require first-hand testimony to the facts and/or events under consideration. Therefore, persons with direct knowledge of the issues that caused the job separation, especially those relating to the final incident, are needed to participate at the hearing.

While some states will permit hearsay testimony and accept notarized statements from non-appearing witnesses, this type of information is never sufficient to overcome direct, first-hand testimony from either the claimant or the claimant's witnesses.

So, even if your state does allow hearsay testimony or accept a notarized statement, it is best to be on the safe side and send the witness.  Remember a lost case will cost on average about $4,500 so its worth the time to attend.  You wouldn't want to end up paying for a claim where the claimant wouldn't otherwise be entitled to unemployment benefits under state regulations just because you didn't show up. 

Tammy Mullin

Ever want to know what the unemployment insurance tax rate is in your state and how that compares to what you pay or what employers pay in other states?  How about average duration of an unemployment claim or the exhaustion rate for claimants collecting unemployment?

The DOL issues a quarterly report that can tell you this and much more about what is happening in the states in which you do business.    It’s sad to say, but I find it an interesting read.  I thought maybe you all would too.  Check it out at http://workforcesecurity.doleta.gov/unemploy/content/data.asp.

While you might not be able to do anything directly to influnce the statistics for your state, being informed can help you plan for the future.  Understanding whether your state has outstanding federal loans or how much revenue (tax collections) they take in can be an early indicator of what to expect to happen with your tax rates in the upcoming year and can help with forecasting.  I'm sure most companies are going through budget season right now and are just loving every minute of it. 

If you have an unemployment cost management service provider I would encourage you to talk to them about forecasting your rates for 2010.  If not, be aware and do your homework.  We provide legilative updates to employers (free of charge - how often do you hear that?).  Click here to sign up.

Tammy Mullin

I thought I’d send out some more real content today instead of my opinions about the world around us so here goes…..

When the unemployment compensation laws were originally enacted in the 1930s, the intent was to provide a supplement to individuals who were unemployed through no fault of their own.  However, unemployment laws have eroded (well, one opinion) to the point that even a person who voluntarily quits or is discharged may collect benefits!

A best practice for controlling unemployment insurance costs would be to make a probationary period a part of your company’s policy.  A new employee’s performance should be reviewed during an initial “probationary period.” If the employee does not meet expectations, you should determine whether additional training could bring the employee's work up to standards. If retraining is not a reasonable option and no alternatives exist, consider dismissing the employee as quickly as possible.

Even though most states do not recognize employer probationary periods and may award benefits to an employee if he was discharged for inability to do the job. Your liability for benefit charges is based on the amount of wages you paid the employee. Therefore, if you take immediate action regarding unsuitable employees, your unemployment liability will remain low.

Some states do provide for some type of probationary period within their unemployment compensation laws.  The states and particulars are as follows:

Colorado – The employer’s account is not charged if the claimant earned less than $1,000 (this applies to Merit Rated employers only).

Connecticut – The employer’s account is not charged if the claimant was employed for less than 30 days, whether or not consecutive, or if the claimant worked less than 240 hours for the employer.

Florida – The employer’s account is not charged if the claimant was paid less than $100 during the base period of if the claimant was terminated due to unsatisfactory performance during the initial employment probationary period.  The probationary period cannot exceed 90 days and must be an established plan (Employee must be informed of the plan within seven days of the date hired.).

Georgia – The employer’s account is not charged if the claimant was employed for less than 30 days, whether or not consecutive, or if the claimant worked less than 240 hours for the employer.

Illinois – The employer’s account is not charged if the claimant was paid less than $100 during the base period or if the claimant was terminated due to unsatisfactory performance during the initial employment probationary period.  The probationary period cannot exceed 90 days and must be an established plan.  (Employee must be informed of the plan within seven days of the date hired.).

Kentucky – An employer’s account is not charged if it employed the claimant for less than 10 weeks, whether or not consecutive.

Maine – The employer’s account is not charged unless the claimant worked in excess of 5 consecutive weeks or at least 6 consecutive weeks of employment.

Minnesota – The employer is granted relief of charges when an employee is paid less than $500 in the base period.

Missouri – The employer’s account is not charged if it paid the claimant $400 or less during the base period or if the claimant was employed for 28 consecutive days (calendar days) or less and this was noted on the employer’s wage report to the state.

North Carolina – The employer’s account is not charged if the employee’s employment did not exceed 100 days and termination was due to inability to perform the job.

Oklahoma – The employer’s account is not charged if it paid the claimant $400 or less during the base period or if the claimant was employed for 28 consecutive days (calendar days) or less and this was noted on the employer’s wage report to the state.

Rhode Island – For any new claim filed, if an individual works less than 4 weeks, and in each of those 4 weeks earns less than 20 times the state minimum hourly wage, the employer will not be charged.

South Carolina – The employer’s account is not charged if it paid the claimant less than 8 times the weekly benefit amount.

South Dakota – The employer’s account is not charged if it paid the claimant less than $100 during the base period or if the claimant was terminated due to inability during a 90-day pre-arranged probationary period.

Virginia – The employer’s account is not charged if the claimant was employed for less than 30 days, whether or not consecutive, or if the claimant worked less than 240 hours for the employer.

So, consider the best practice of making a probationary period a part of your company policy and refer to the probationary guidelines when reviewing new employees.   Be sure to review any changes to policy that you plan to make with your Unemployment Cost Management services provider to be sure your policy will meet the requirements in your state. 

Tammy Mullin

Wanted to send out some follow up information about 2010 Unemployment Insurance Tax Rate Calculations.  I posted some information the other day about an issue in Texas indicating that the extension of the filing date for 3rd quarter 2009 could impact your rate calculations if you aren't careful.

This is applicable to Texas only.  Other states may or may not extend the deadline, but either way, it won't impact the tax rate calculations.  I thought employers not in Texas might want some clarification as well.

Tammy Mullin

We previously reported that Indiana employers could expect an increase in not only unemployment taxable wage base (going from $7,000 to $9,500), but tax rate as well (changing from a range of 1.1% to 5.6% in 2009 to 0.7% to 9.5% in 2010.)

Some recent activity in the state senate however could give Indiana employers a break, at least in 2010.  Lawmakers are proposing a delay in the unemployment insurance tax increases to give business owners a break and hopefully encourage new job growth in the state.

While I wholeheartedly agree with a delay in the tax increases, it appears that certain lawmakers may be banking on a bailout of state unemployment insurance funds as the rationale for why a delay could make sense. 

It is interesting given the position that the Nevada Economic Security Council took when they considered reducing the tax on employers in 2010 and statements made by South Carolina Board of Economic Advisors Chairman, John Rainey.  (See my previous blog "What would happen if interest was waived...?")  These state advisors took the position that the federal loans had to be repaid or employers would end up paying more later.

In my heart I don't believe in government bailouts, however, it has been a practice for so long that is has come to be expected (as evidenced by comments made by Indiana lawmakers).  We have created a situation where there is almost no longer a choice in whether to bailout a sector of the economy or not. 

So, if there is any thought by federal lawmakers out there that a bailout of the trust funds could happen, I wish they would just go ahead and do it so employers in all states could possibly benefit from some relief. 

We'll keep a close watch on what happens in Indiana, but don't expect a decision quickly.  The delay won't be discussed until the next Senate session in January. 

Tammy Mullin

We are notifying our employers of an issue with the filing deadline in Texas for the third quarter this week.  While this notice is going out to all our clients, I also thought it important enough to post on our blog in case anyone is out there searching on these rules for Texas. 

Situation

The third quarter, 2009 unemployment insurance contribution report filing deadline of October 31st falls on Saturday this year.

What Employers Need to Know

According to Texas law, if the quarterly filing deadline falls on a Saturday, Sunday or a legal holiday, it is extended to the following business day. No penalty will be assessed as long as the report and payment are postmarked or filed electronically before midnight CST the next business day. That date is Monday, November 2nd for this quarter.

Since the computation date for employer’s 2010 rate calculations is September 30, 2009, another section of the law applies. Only taxable payroll from reports filed and paid by October 31, 2009 is included in the 2010 unemployment insurance rate calculation. That date is NOT extended; therefore, employers should plan on filing and making payment by October 31, 2009 to ensure proper credit in their rate calculation. Not getting credit for the third quarter taxable payroll could have a detrimental effect on the 2010 rate assignment.

Bottom Line

Even though you have til the 2nd to file your report, doing so will likely have a negative impact on your 2010 state unemployment insurance rate calculations in Texas.  You want to plan to file on the 30th to avoid problems. 

Tammy Mullin

I know this is posted on our website, but I really wanted to highlight this article from CCH's Journal of Taxation in the July/August publication.  The article titled The Recessionary Impact on Unemployment Insurance Taxes - 2009 and Beyond was written by our very own Lori Roberts.  Lori is a Senior Manager in our Government Relations group and sits on the board of the UWC, an organization focused on Unemployment and Worker's Compensation legislation and the impact of both on employer organizations.  Her background and expertise is unmatched in the industry.

Some of the information is a little dated, but the article does a great job of talking about the topic in terms that I think most people can understand and gives some basic information about how unemployment works in the section UI Financing 101. 

Tammy Mullin

For anyone out there wondering where all that stimulus money is going, check out www.recovery.gov.  I have to say that I was somewhat skeptical about the impact of all that Recovery Act spending.  Actually, I'm still somewhat skeptical about the impact.  However, I spent some time digging around the site tonight and while I was heard to issue a couple "Oh come on"'s and a few "Seriously?"'s I also found myself thinking "Well that's not so bad" for a few.

This one story in particularly about an EPA project in PA was interesting.  Not only did they create jobs from the project, but they are upgrading water service where residents "for the last 10 years...periodically have been without sufficient quantities of clean drinking water, or without water service at all."  It might be costing $12.5 million to create 100 jobs, but really 40,000 people are being positively impacted. 

Tammy Mullin

Managing unemployment insurance costs in any environment is difficult, but particularly so as it relates to retailers.  Part of the value of outsourcing to an Unemployment Cost Management vendor is being able to centralize the process in a very decentralized environment.  Retailers have stores across the country which makes if very difficult to ensure the effective management of proper documentation, 1st hand witness reports and other aspects of an Unemployment Cost Management program.

While the vendor can handle all the paperwork, the expertise necessary to do prep work with witnesses and generally advise you on case work, really making sure that stores comply requires special attention.  A great best practice for retailers is to experience rate your stores and allocate unemployment taxes across the organization.  Your bound to get more attention from your store managers if the cost of unemployment hits their bottom line.

Tammy Mullin

Georgia Department of Labor has an interesting program in their state to help get unemployed workers back to work.  It’s called “Georgia Work$.”  The basic premise is that participating employers provide workforce on the job training to UI Claimants that qualify for up to 6 weeks.  The state pays the UI Claimant directly in the form of continued unemployment insurance payments while the employers pay nothing.

Critics of the program complain that the try before you buy process is limited in its scope, encourages employers to abuse the workforce by getting free labor and just plain doesn’t work.

My question is, what’s wrong with being able to evaluate a potential hire during training before you commit to a long-term working relationship with that person?  The program only lasts for 6 weeks which gives the employer ample time to evaluate their hiring decision, but certainly not enough time to encourage abuse.   It doesn’t even make good business sense to abuse this type of program.  Well, unless of course you work at Paddy’s Pub in “It’s Always Sunny in Philadelphia.”  They tried to abuse a similar Welfare Program in “Dennis and Dee Go on Welfare.”  Funny episode, but not something that happens in real life.

The Georgia Department of labor has posted the following statistics about success rates since the program’s inception in 2003; 60% of those completing the program are hired, more than 3,000 UI Claimants have found full time employment and 6,000 different Georgia employer have participated.  Georgia thinks those are great numbers and has recently talked expansion of the program .  Also, Georgia is counted among the states that have yet to take a Title XII Loan from the Federal Government, although they are on the TALX watch list.

So, you tell me does Georgia Work$ work?  In my mind it is hard to criticize a program that helps people find jobs.

Tammy Mullin

Well the Nevada Economic Security Council met on Tuesday and unanimously voted to recommend to hold unemployment tax rates steady for 2010 despite Governor Gibbons' recommendation to lower unemployment tax rates for state businesses.   The actual rates will be decided at the end of the year by Economic Security Administrator, Cindy Jones.  The board also voted against two measures that would have increased unemployment tax rates for Nevada employers. 

It appears that employers in the state had mixed feelings about an unemployment tax decrease, but in the end it appears that concerns over having to pay back federal unemployment loans with interest is what had local Chambers supporting a hold steady strategy.  While the interest on federal loans has been waived through the end of 2010 as part of the Economic Stimulus Package, borrowings have been significant for many states and interest will need to be paid through unemployment tax revenues collected from employers.

Employers in South Carolina aren't as lucky.  The Board of Economic Advisors are recommending in increase in wage base and a surcharge on unemployment compensation paid by all employers.  Depletion of the fund and the resulting high interest payments due on federal loans was a key factor in the recommendations.  Board of Economic Advisors Chairman, John Rainey, stated; "It’s unfortunate that these funds have to be siphoned off of creating jobs, building plants and equipment, and helping us come out.  But the federal debt must be repaid." (see full quote here)

I can't help but wonder how different things could be if policy changes were made to support a waiver of interest on all Federal Unemployment Trust Fund Loans made during hard economic times?

Tammy Mullin

Well, we issued our press release for TALX Reemployment Services last week and we couldn't be more pleased with the interest and feedback for the new offering.  Employers truly see this as an opportunity to provide a real service to their exiting employees and to their communities.

I promised some more information about what this new service is all about so here goes.  Programs include but are not limited to the following;

• One-on-one job coaching to keep the job seeker motivated, confident, connected and educated in their job search
• Program designed to keep them on-track and engaged
• Create a strategy plan for reaching "hidden" jobs
• Identify transferable skills
• Keep the job seeker focused on their next job rather than their last job
• Access to proprietary eLearning software allows the job seeker to manage their job search information and activites
• Aggregated access to job board posts
• Resume building focused on accomplishments
• Online seminars & training
• "Virtual Job Club"

We use proven techniques to give job seekers the skills and confidence they need to find a job quickly and training on how to be successful in their new positions.   And, the best part for employers is that they get to do the right thing with a service that pays for itself in unemployment and other cost savings.

Tammy Mullin

Well done Gov. Gibbons (Nev. governor recommends lower unemployment taxes)!  I've been asking myself how we can really expect employers to create jobs and quite frankly stay in business when their taxes continue to rise.  In an economy like this, business is way down.  Raising taxes really seems counter intuitive.  If we kick them while their down, they might just stay down.  Today's unemployed workforce can't afford for any more businesses to be closed or jobs lost.  I sincerely hope the panel sees the logic in your recommendations. 

Tammy Mullin

Well we released some great news this week about a new service offering called TALX Reemployment Services.  I have to say that this has been a passion for us for the last, well year really.  It was about a year ago when we sat down to think about what direction we wanted to take for the product line and asked ourselves whether there was a bigger picture that Unemployment Outsourcers were missing. 

For many years now unemployment cost control efforts have been focused on protestable claims, benefit charge auditing, verifying tax rates and looking for other tax reduction opportunities.  All important in controlling unemployment costs, but we all (employers and service providers alike) have been missing the boat. 

When you take a step back and think about what impacts the cost of unemployment the most, the answer is pretty simple isn't it?  It's the fact that people are unemployed.  So yes, making sure that employers are only charged for benefits that are their responsibility is important, but is it the most important thing?  

The longer a person remains on unemployment, the higher the cost to the employer.  Since the majority of people filing a claim for unemployment are eligible to collect that would mean focusing on helping to control the duration of a unemployment claim is as important if not more important than the traditional unemployment cost control model with the main focus being on protestable claims.

So we spent some time thinking about all of this and asked ourselves what we could do to help control the duration of an unemployment claim and help employers do what they want to do which is take care of their displaced workers.  Our solution is a service that let's employers do the right thing and pays for itself in unemployment cost savings. 

I can't tell you how thrilled we are to be working with the team at NextJob to deliver a service that could have a tremendous impact in the lives of displaced workers. 

More to come on actual product features, but for now I have to say that it feels great to be in the business of getting people back to work more quickly. 

Tammy Mullin

I'm off to Atlanta this morning to talk to some employers about environmental factors impacting their unemployment costs.  Unemployment is all over the news of course, so they see what is happening on a daily basis, but do we hear the whole story on the news?

We are looking at another extension of unemployment benefits.  This extension would be funded by extending for a year a federal unemployment tax on employers that has been in place for 30 years.  Even though past benefit extensions were funded by the Federal Government, not by employers, we are kidding ourselves if we don't think employers are impacted.  I can't even begin to tell you the amount of paperwork employers receive on individuals collecting unemployment benefits.

Some states send out weekly requests for information for the entire duration of the claim.  If the current legislation passes, we would be looking at some individuals receiving 92 weeks.  Other states send out 2 forms for each claimant, both asking for similar information. 

All that paper has to be processed and responded to by someone and whether an employer uses a 3rd party administrator like TALX or does it themselves the employer is impacted.  I'm not saying that the unemployed don't deserve help during these hard economic times; I'm just saying that it would have been nice to provide a solution that didn't bury employers in paperwork.  It takes them away from their core goals of growing their business and hopefully creating jobs.  

Tammy Mullin

At a time when employers are facing higher unemployment costs due to increased benefit payouts, forced expansion of benefits for states accepting stimulus money and interest charges for necessary federal loans to name of few, the North Carolina Bar Association has issued an opinion that if it becomes binding would require employers to contract with a licensed attorney in the state of North Carolina if they wish to have representation at an unemployment hearing.

This change in essence means that employers will have to either pay more to be represented at a hearing, or skip representation altogether.  Skipping representation altogether is a bad choice for employers.  The current average cost of an unemployment claim to the employer is running about $4,500 and eligibility rules vary by state.  Without an expert at the hearing with them, the employer runs a higher risk of losing a winning case simply due to lack of knowledge.

I'm not in any position to dispute whether the NC Bar Association's opinion is valid or not.  I haven't read it and don't know the facts of the case.  What I do know is that in today's economy, employers are struggling to stay afloat.  They really can't afford to have many more legislative changes that end up costing them dollars they could be using to expand their businesses and create jobs.

Tammy Mullin

Well, it’s been awhile. I didn’t realize quite how long until a member of my team sent me an article about corporate blogging as a gentle reminder and another one point blank said, “You haven’t written since July 6th.” The fact that he knew the exact date was certainly telling.

So, I thought I better come back with some really useful information. Anyone who has ever attended an unemployment hearing for their employer knows it is really a stressful situation. I know, because I actually attended one when I worked for another company. I was nervous about the process and didn’t quite know what to expect. Someone from HR was with me, but I’m not sure they really knew what to expect either. Facing my former employee and telling my side of the story was nerve racking.

Well, I thought it might be helpful to pass along some advice from our very own resident expert, Doug Johnson, Director of Appellate Services here at TALX and here’s what he said:

Don’t ignore instructions on the Hearing Notice

• Note the date, time and whether the hearing is in-person or on the phone
• Remember to put the appointment on your calendar
• Familiarize yourself with specific state instructions and protocol in your state
• Follow all instructions exactly or else you may be precluded from participating in the hearing

Don’t be late

• Sometimes claimants and employers wait for the hearing officer, but the hearing officer might not wait for you.
• Yes, it’s a double standard, but you don’t want to get off on the wrong foot with the person who is deciding your case.

Don’t attend without an eye-witness

• The best person to testify at an unemployment insurance hearing is one with personal, first-hand knowledge.
• Although an HR representative may be able to testify about company policies and procedures, if he or she is limited by information or documentation provided by others, then his or her testimony might be given little weight.

Don’t forget to bring pertinent documentation

• The saying, “if it isn’t documented, then it didn’t happen” is very true in the unemployment insurance arena. Written policies, procedures, acknowledgments and warnings are among critical documents that can help you prove your case.
• Again, read the instructions on the Notice of Hearing. If you fail to comply with instructions, your documents may not be admitted into evidence.
  • In telephone hearings you will probably be required to mail proposed exhibits to the hearing officer and to the claimant in advance of the hearing.
  • For in-person hearings, you will probably be required to bring additional or “give-away” copies with you.

Don’t be unprepared

• A hearing officer, who conducts many hearings on a tight schedule, can become irritated or impatient if the parties are not organized and prepared.
• It’s important to collect your thoughts in advance, to know the points you’d like to make and to anticipate questions that may be asked.
• If you are fumbling through papers or are slow in providing answers to basic questions, you will not leave a good impression.

Don’t approach the process with a cavalier attitude

• Although an unemployment hearing is not a trial or a court of law, it is a “quasi-judicial” process that has definite and defined consequences for both the claimant and the employer.
• Hearing officers appreciate a serious and professional attitude on the part of the witness. Joking around or being too familiar or casual is not the best way to behave.

Don’t leave your manners at home

• Be polite and respectful of the hearing officer and the claimant. Address them formally.
• Don’t be sarcastic or argumentative.
• Don’t chew gum, say “Yep” and “Nope”
• In short, behave like your Mother taught you! You want to present yourself as a professional, confident and articulate representative of your Company.

Don’t dodge questions

• One of the most important rules to follow at a hearing is to listen to the question asked by the hearing officer, focus on that question and then answer it directly, clearly and concisely.
• Don’t “beat around the bush,” you may leave the impression of being either unprepared, evasive or untruthful.
• Short and sweet answers are best. Answer “Yes” and “No” questions with just that. If a hearing officer wants more information, he/she will ask you a follow-up question.
• If you don’t know an answer, be honest, rather than making something up.

Don’t squander opportunities

• You will be allowed to ask questions of the claimant. This is a good opportunity to bring out additional relevant information that the hearing officer has not elicited. But, here’s a word of caution: don’t ask a question if you don’t know the answer—or if there’s a possibility that you won’t like the answer.
• Think twice about asking the claimant a “Why?” question. You may get more than you bargained for.
• If given the opportunity to make a closing or summary statement, be short and sweet; hit the high points of your case; offer resolution to any discrepancies or contradictions between your position and that of the claimant, and then stop talking.

I know this was longer than a traditional blog. Bordering on more of an article really, but Doug’s a smart guy and I wish I had this advice before my case. I would have skipped that failed attempt at a joke.

If anyone out there would like to share their advice based on their experiences, we’d love to hear it.

Tammy Mullin

Read a couple interesting articles this week.

The first ISS - Unemployment reforms sweep nation due to federal recovery incentives talks about reform from the standpoint of the "incentives" states are given in the form of ARRA dollars to expand their programs so that more individuals will be eligible to collect for longer periods of time. The reform here is program expansion.

Another article I read was from the state of Indiana, New Indiana law changes unemployment rules - Fox 28: South Bend, Elkhart IN News, Weather, Sport which talks about new laws around proof of job search where recipients must "submit at least one job application each week" and new rules around acceptance of job offers which outlines when recipients are required to accept offered employment.

State funds pay out billions of dollars a year in unemployment claims due to fraud for numerous reasons. One of those reasons is due to individuals who are not actively seeking to become reemployed. Fraud is a drain on unemployment trust funds and means more taxes for state employers.

I think legislators from Indiana have the right idea, are interested in the right kind of reform and are putting in place laws that are making a permanent impact on the future of Unemployment Insurance as an insurance program. Laws and procedures which address fraud help preserve state fund balances, keep taxes down for employers which in turn I believe will help employers produce more jobs.

Tammy Mullin

There are alternatives to a layoff available under state unemployment insurance programs that employers may want to consider to preserve their workforce and help workers keep their jobs during this economic downturn.

Employers in Berks County, PA are offering reduced work weeks with great success. In fact, all states offer partial benefits for reduced hours, although the extent of benefits will vary by state. This option provides continued employment to the employee who can supplement their income through partial benefits.

Another alternative relates to worksharing programs. A recent New York Times article talks about this program highlighting that "many executives and economists hail it for keeping workers employed and companies staffed with skilled labor" while stating that "only a fraction of the businesses and workers that are actually eligible are benefiting."

Worksharing is only available in 18 states; Arizona, Arkansas, California, Connecticut, Florida, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, New York, Oregon, Rhode Island, Texas, Vermont and Washington.

Requirements for both programs vary by state, so be sure to review requirements on your state’s website before opting for either option.

What I find interesting is that we hear a lot of talk about costly job creation programs (the White House just issued their Roadmap to Recovery which outlines specific job creation measures and state governors including Missouri’s Gov. Nixon are talking about job creation in each of their individual states), but very little about what can be done to save jobs using programs that already exist, are less costly to taxpayers and are underutilized.

Tammy Mullin

In these troubled times, many companies are being forced to make substantial staffing cut-backs. Announcements are coming daily with some industries being affected more than others. The automotive industry in particular is scrambling to "right-size" its workforce in an effort to avoid bankruptcy and as part of recovery plans associated with Federal Bailout grants (GM's Downsizing Strategy Moving With Great Efficiency | workforce.com.)

From an unemployment perspective it is essential to understand the impact a layoff will have on your company’s unemployment tax rate. In addition, failure to meet certain employee notification requirements under the Federal Warn Act could result in penalties and open the door to class action suits or individual employee lawsuits (TALX Bulletin Employer Downsizing.)

From a liability perspective, it is important to protect your company in the area of employment litigation (Nine Ways to Protect Your Company During Staff Reductions | workforce.com.)

Lastly, maintaining employee morale for those left behind can be a challenge. Treatment of exiting employees can say a lot about a company and has a tremendous impact on the productivity of the remaining workforce (In a Time of Layoffs, Keep Human Resources Humane - BusinessWeek.)

While workforce reductions are often reactionary resolutions to tough economic conditions, planning is essential. It is crucial that you know the impact of every decision made along the way.

Tammy Mullin

Interesting controversy over Texas Governor Rick Perry’s announcement in March that he was rejecting additional unemployment funding because there were too many strings attached Texas Governor Rick Perry Rejects $555 Million In Stimulus Money - cbs2.com. He continues to make headlines and was even the brunt of jokes on The Colbert Report on April 20th. 

Other states are agreeing with Perry, just look at the press coming out of the State of Virginia recently Virginia Lawmakers Split on What's Best for Workers, Employers - washingtonpost.com.  

So why is this happening?  What are those strings everyone is talking about?  

Well, states will get a portion of $7 billion, if they have enacted or will enact an “alternative base period” – the earnings period used to establish a UI claim – as well as two of four other unemployment benefit expansions: 1) part-time worker eligibility; 2) compelling family reason quit eligibility, 3) benefits for dislocated workers in approved training; and 4) dependent allowances.  When the stimulus money runs out, Texas estimates that it will cost employers an additional $75 million a year TEXAS GOV. RICK PERRY STILL OPPOSES ACCEPTING STIMULUS MONEY FOR UNEMPLOYMENT BENEFITS.

While we know that the additional unemployment coverage will benefit the individuals out there desperate for work now, what we don’t know is whether that will have enough of an impact on the economy to outweigh the negative impact on employers struggling to stay in business.  At the end of the day, only time will tell.
For more information on the Stimulus package, visit the Industry Insights section under News and Events at www.talx.com .

Tammy Mullin

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