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

We recently held a Webcast where we had some experts talk about the impact the current recession is going to have on employer's taxes next year and in to the future. It also addressed the solvency of the trust funds in many states and talked about legislation that may have some impact. If you're interested in hearing the presentation, we have it available at the following link. The title is "Unemployment Taxes-An Emerging Crisis?" 

http://www.talx.com/News/IndustryInsights/index.asp

Pat Powell

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

South Dakota Department of Labor has made a formal announcement about a surcharge of 1.5% of taxable payroll in 4th quarter 2009 payable in January 2010.  Using 2008 taxable wage data as a basis for making an estimate, it looks like employers could be footing the bill for an additional $4 million for 4th quarter 2009 alone.  The surcharge was triggered by the low unemployment insurance trust fund balance at the end of the 3rd quarter of 2009.  The Department of Labor is expecting the surcharge will continue through the 2nd quarter 2010. 

The bad news is that the surcharge payments are not credited to the employer’s state account for purposes of determining experience rating which ultimately impacts the employer’s unemployment tax rate.  This is an on top charge which is a great example of the fact that the employer doesn't just pay for charges of their own employees, they pay for the charges of others as well.  It is a general estimate that on average, employers will pay $1.50 for every dollar charged to their account.  In South Dakota, the average is about $1.70.

Tammy Mullin

I have two great updates to share with you this week. 

The first update is in regard to the Training and Employment Guidance Letter (TEGL).  The IRS issued a reminder to businesses that are planning to claim the work opportunity tax credit for eligible unemployed veterans and disconnected youth hired before mid-September. The TEGL also provides guidance to State Workforce Agencies on acceptable documentation and processing for the new WOTC categories.   Businesses have until October 17, 2009 to request the certification required for these employees. A business usually files Form 8850 with the state workforce agency within 28 days after the eligible worker begins work. Under the extended period granted, businesses have until October 17, 2009, to file this form for unemployed veterans and disconnected youth who began work on or after January 1, 2009, and before September 17, 2009.

The second update is in regard to President Obama’s economic team seeing the value in job creation.  The New York Times article “Support is Building for a Tax Credit to Help Hiring” addressed the possibility of Washington creating a tax credit to stimulate hiring.  One version of the hiring credit will be revealed this week.  The proposed credit would give employers a two-year tax credit if they increased the size of their work force or added significant hours of work. Employers would receive a credit worth twice the first-year payroll tax for each new hire.  

Angela Lockman 

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, it's been a while since the last posting and many things have happened and continue to happen. Based on conversations with DHS and others in the industry, here are a few things to take into consideration regarding the FAR rule.

• Due to the number of comments and suggestions USCIS has received since issuing th E-Verify Supplemental Guide For Federal Contractors on September 8, 2009, USCIS will be issuing an updated version in the near future.
• USCIS also issued an updated E-Verify User Manual For Federal Contractors on September 8, 2009. It is anticipated that an updated version of this document will also be issued to correct errors such as missing sections and poor wording.
• USCIS announced this week on the E-Verify website that the Photo Matching Tool, designed to help prevent document fraud, will be made available to E-Verify Designated Agents (soon to be referred to as E-Verify Service Providers) by the end of the year. The tool is already available to employers using the E-Verify website. Designated Agents will likely have between 6 and 9 months to update their electronic I-9 services to use the new E-Verify web service interface including the Photo Matching Tool.
• There are two groups of existing employees that can be considered exempt from E-Verify for purposes of complying with the FAR rule. However, if you must treat all employees in a group the same to avoid potential discrimination. If you submit one employee with an HSPD-12 background check, then you must submit all employees in the group. These groups include:
  • Employees with an active confidential, secret, or top secret security clearance
  • Employees with credentials issued as a result of an HSPD-12 (Homeland Security Presidential Directive 12) background check.
• Any existing employee who has already been submitted to E-Verify may not be submitted again unless they have been rehired since last being submitted to E-Verify. If you have used E-Verify for any existing employees you should generate the User Audit Report from the E-Verify website. This gives you an Excel file of the employees already verified by E-Verify so you can avoid submitting them more than once.
• Be careful when deciding to verify all existing employees or only those assigned to a FAR contract. Once you make this decision you can't change it.
• Employers have the ability to consider the legal entity that signed the contract as the contractor and bound by the FAR rule. NOTE: Consult your legal counsel to determine if certain subidiaries and affiliates are part of the legal contracting entity.
• Finally, based on feedback from many employers, industry organizations, and off-the-record discussions with DHS the best practice for verifying existing employees is to submit ALL existing employees to E-Verify by creating a new I-9 for each existing employee. For many employers verifying all existing employees is the lesser of two evils. NOTE: You must retain the employee's original I-9. Here are some reasons why verifying all existing employees is being considered the best practice.
  • This is a one-time event. If you decide to only verify employees working on a FAR contract, then you have an ongoing, never ending obligation to continue to verify existing employees transferred to an existing FAR contract or assigned to a new FAR contract.
  • Once you are finished you will only need to verify all new hires.
  • You have one process used uniformly across the entire organization.
  • You will have to complete new I-9s for at least some of your employees. This is because an I-9 must comply with E-Verify. Since a new I-9 was issued April 3, 2009 that now includes 4 citizenship options in Section 1 and no longer allows expired documents to be used to complete Section 2, all of your existing I-9s will not comply with E-Verify. By completing new I-9s for all existing employees you avoid having to manually audit your I-9s to determine which ones comply with E-Verify and which ones don't. For those that don't comply, you will have to complete a new I-9 anyway. Since most of your existing employees were probably hired prior to April 3, 2009, you will have to complete new I-9s for most of your employee anyway.

In closing, compliance with the FAR rule is causing employers to really consider moving to an electronic I-9 with E-Verify. This will reduce the hassle, eliminate errors with real-time error checking, promote your GREEN initiatives, automatically receive notifications for employees with expiring work authorizations (reverifications), reduce liability by automatically purging old I-9s for terminated employees once the I-9s have satisfied Federal retention requirements, and provide enhanced compliance reporting.

NOTE: For TALX clients already using The Work Number employment verification service from TALX, we already have the data we need for I-9 compliance reporting.

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