Unemployment taxes can be a major expense for the staffing industry, not only because of the various challenges such as branch turnover or a dispersed population but also because unemployment rates are based on the collective experience of all branches within a state.  As a result, one ineffective branch can negatively impact all branches in that state. But within any organization, costs related to unemployment can still be controlled.

In 2009, TALX conducted a comprehensive survey seeking feedback from our client partners within the staffing industry.  Highlighted below are 5 best practices used in the staffing industry that can help you manage costs associated with unemployment compensation.    

Best Practice #1: Choosing the right candidate- Onboarding

Effective onboarding adds qualified applicants to your candidate pool to be placed with clients. In this stage it’s important to conduct and use tools such as formal assessments, job interviews, background checks, and also implement procedures to review your organization’s policies.  As it relates to controlling unemployment taxes, the onboarding stage should serve several purposes:

ü  To get qualified job candidates

ü  Explain policies and procedures to obtain signatures of acknowledgement from the candidate

ü  Verify the candidate’s job requirements and help set reasonable requirements for pay, hours, etc.

Best Practice #2: Management and Practices of Policy/Procedures

Your employee handbook should provide essential information regarding workplace rules and operations. Below are important policies and procedures that all employees should receive and acknowledge with a signature.  Acknowledgements should be retained as documentation of their acceptance and understanding.

ü  Call-in Policy: Identifies the appropriate channels for reporting absence or being tardy.

ü  Contact Policy: Your company’s procedures to line up new work when an assignment is coming to a close or after it has ended.

ü  Voluntary Quit Procedures: Company expectations regarding notification of a voluntary resignation.

Best Practice #3: Job Requirements and Candidate Placement

Placing candidates with client job assignments that are a good “fit” are important because when the client’s and candidate’s expectations and requirements are met, you have offered a valid job. You should always:

ü  Explain relevant job requirements and help the candidate to have realistic expectations (hours, pay, work conditions, etc.)

ü  Have the candidate sign off on the agreed upon job requirements

The validity of an assignment is pivotal in a state agency’s decision to award or deny unemployment benefits after a candidate’s refusal of a suitable job offer.

Best Practice #4: Assignment Management & Monitoring

Whether it is software driven or a manual process, it is beneficial to have a system to select and place qualified candidates, track when an assignment is ending for future and continuing placement, and to monitor the workplace relationship between the temporary employee and the client.

In addition, it is also helpful to prioritize the assignment of candidates first to their qualifications, then to whether they are collecting unemployment benefits, and finally go to those candidates whose earnings meet or exceed the taxable wage base in your state.

Best Practice #5: Documenting for Separations, Job Refusals and Availability Issues

In order to provide the best response to a claim received from the state, you must have effective documentation. If you fail to provide the details and documents (signed acknowledgement of policies, written warnings, etc.), you are not effectively providing the state with proper information to make an informed decision.  It is also important to provide the state with specific documentation related to refusals of suitable work offers and restrictions on a person’s availability for work.

The survey results are clear.  High performing staffing organizations use effective candidate and employee management programs, as well as implement key processes and procedures from the hiring phase to the separation phase.

Aimee Cernik

Ran across this piece the other day, “How the Jobless Can Find Support in a Job Club” which talks about the benefits of a well run job club.  Here at TALX we are strong supporters of using job clubs to help get folks back to work faster.  In fact, we use job clubs in the delivery of our TALX Reemployment Service.  The service is purchased by employers as a benefit for exiting employees and is designed to motivate, educate and connect job seekers to available jobs more quickly than they would otherwise be able to do on their own.

This author does a great job of explaining what to look for in a job club from the job seeker’s perspective.  As an employer, whether you choose to provide help for exiting employees through an outsourced solution like the TALX Reemployment Service or provide support in house, putting together a job club to support laid off workers in their search for new employment can go a long way toward helping them get back to work more quickly.

Tammy Mullin

It’s important for today’s job seeker to make connections through networking these days, after all, most jobs are not found on the internet. They are found through getting out and talking to people, finding out what is available, and in a lot of cases cold calling employers to see what jobs they have available that aren’t posted. 

As an employer, you can help your exiting employees find new jobs faster by staying connected as well, like this company in the UK did when forced to lay off part of their workforce.  By talking to other employers in their area, Tesco was able to place a good portion of their skilled labor elsewhere within the community.  We know of several companies that have done this and established ongoing agreements with other employers in their area.  They check in with each other whenever they need to let folks go or hire because they know they will get quality replacements to fill their open positions.  This saves on recruiting costs, decreases time to fill open positions, decreases training costs and saves on unemployment costs because laid off employees find work faster. 

Tammy Mullin

By: Dave Fowler

IMAGE (ICE Mutual Agreement between Government and Employers) is program in which ICE (Immigration and Customs Enforcement) partners with employers to promote the employment of a legal workforce. On August 9-10, 2010 ICE held the 2010 IMAGE Employer Training Conference in Washington, D.C. I attended this conference and also met with representatives at E-Verify so, I thought I’d share some of the information.

First, there were about 100 attendees along with ICE leadership, special agents, and subject matter experts. The speakers included notables such as Alonzo Pena, ICE Deputy Director, Jim Spero ICE Deputy Assistant Director, and Brett Dreyer, Worksite Enforcement Unit Chief. Other speakers included representatives from the Executive Office of Immigration Review (EOIR), Office of the Chief Administrative Hearing Officer (OCAHO); the US Attorney’s office; the Office of Special Counsel; Office of Principal Legal Advisor; Forensic Document Laboratory; SSA; and E-Verify.

• ICE’s top priorities are to penalize employers who knowingly hire illegal immigrants, deter employers from hiring illegal immigrants, and take advantage of compliance tools.
• ICE I-9 audits are no longer random but primarily driven by leads and other information.
• ICE prioritizes opportunities and will address the largest offenses first.
• ICE is increasing outreach programs to educate employers on such things as properly completing I-9s and hiring best practices.
• ICE is increasing its capacity to do more I-9 inspections.
• ICE Worksite Enforcement focuses on:

1. Critical infrastructure protection
2. Egregious employers (illegal immigration is part of the business model)
3. Compliance inspections
4. Outreach and education (IMAGE)

• ICE is not responsible for enforcing E-Verify.
• ICE has increased the number of I-9 auditors and has dropped the term ‘forensic’ from their title. Auditors are instructed to be reasonable and focus on compliance.
• ICE and DOL will be signing a MOU to cooperate regarding illegal immigration.
• Copies of employee documents for the I-9 can be retained on paper or electronic format.
• Hardcopy document copies must be able to be presented with the I-9s upon inspection. (The employer cannot hand the auditor a stack of documents for the auditor to match to the I-9s.)
• If an employer is audited, the employer should work with the ICE Special Agent in charge and not the auditor. The auditor is not a law enforcement officer and has no law enforcement powers.
• An effective compliance program is very important to avoiding penalties and prosecution. Having a formal compliance program with documentation and adhering to it can show Good Faith.
• SSA processes 240 million W-2s per year.

1. 10% of W-2s don’t have a name and SSN that match (24 million).
2. 5% of the mismatched W-2s get fixed by SSA (12 million).
3. 12 million W-2s per year cannot be matched by SSA.

• June 25, 2011 – Randomization of SSNs starts. SSA is running out of SSNs in certain parts of the country. The first 3 digits identify where the SSN was issued. With randomization the first 3 digits will no longer identify where the SSN was issued.
• 216,700 employers use E-Verify.
• E-Verify Case Statistics

1. FY2008 – 6.6 million E-Verify cases
2. FY2009 – 8.7 million E-Verify cases
3. FY2010 – 13.4 million E-Verify cases since October 2009

• Passports will be incorporated into the Photo Matching tool in September 2010. E-Verify Employer Agents (formerly Designated Agents) will have 6 months to implement the E-Verify Web Services version (anticipated to be version 22) into their applications.
• E-Verify will be releasing new versions of their documentation in September 2010.
• The E-Verify Self Check application will not be released in December 2010. The timeframe is now sometime during the winter, which may be sometime in Q1 2011.
• E-Verify will provide speakers for free to groups of 30 or more attendees.
• Three quarter view photos were the first biometric feature on cards. A person’s ears are fully developed in terms of shape by the age of 5 and only change in size as the individual gets older. Safe crackers used to put their ear next to the tumblers to crack a safe and they left ear prints.
• Create and follow a SOP (Standard Operating Procedure) document for I-9, E-Verify, and hiring.
• Use a UV (ultra-violet) light/flashlight to check a drivers’ license for fraud. Under UV light there is a seal in the middle of the front of the document that jumps out brightly.
• A flashlight placed behind an EAD/PRC document will show red. (There is a red layer of plastic in the center of the card.)
• There will be a notice of proposed rulemaking regarding Form I-9 published in the Federal Register (www.regulations.gov) and open for comment in 2011 sometime after the first of the year.
• There are two general types of immigration cases.

1. Civil – prosecuted by OLPA
2. Criminal – prosecuted by Assistant US Attorney

• Civil Cases

1. Notice of Inspection (NOI) issued to the employer
2. ICE I-9 audit
3. Special Agent in Charge (SAC) oversees the audit and the auditor
4. SAC sends the Notice of Intent to Fine (NIF) to OSC office of chief counsel
5. NIF served on the employer
6. Employer can pay the fine or request a hearing, the employer has 30 days to request a hearing
7. Settlement agreement
8. Final order on hearing (there is no statute of limitations on a hearing, it could be years before the employer is notified of a hearing)
9. Hearing

• There is one judge who hears the civil cases brought by ICE.
• Three-day rule violations have a statue of limitations of 5 years. After 5 years, there can be no penalty.
• Other violations are considered continuing violations up until the time they are corrected. (Fix your I-9 errors as soon as you find them!)
• The retention period for copies of employee documents made for the I-9 is the same as the retention period for the I-9.
• E-Verify is reviewing a request by the American Payroll Association’s Immigration Subcommittee to allow the employee to provide copies of documents subject to the E-Verify Photo Matching tool.
• Employers can use the USPS to send a copy of an employee’s Photo Matching document to DHS provided the photo is received in a timely manner and sufficiently prior to the 8 government workdays the employee has to contact DHS.
• In addition to English and Spanish E-Verify now provides notices and letters in Chinese, Haitian-Creole, Japanese, Korean, Russian, Tagalog, and Vietnamese. If the employee does not fully understand English, and speaks Spanish, Chinese, Haitian-Creole, Japanese, Korean, Russian, Tagalog, or Vietnamese, you must provide the employee with the notice or letter in one of these languages. In addition, you must give a copy of the notice or letter in English to the employee and retain a copy of the English notice or letter with the employee’s Form I-9.

Lori Roberts, Senior Manager of the TALX Government Relations group explains the “fix” in HR 4213 related to part-time or temporary work.

The federal UI extension legislation signed by President Obama on July 22, 2010 (HR 4213), contains a provision to "fix" an unintended consequence regarding regular UI benefits and federal EUC (Emergency Unemployment Compensation) in instances where claimants had part-time or temporary employment.  Under the newly enacted legislation, states have four options to continue payment of EUC instead of regular UI in certain instances.  Please note, the state agency chooses the option; claimants do not choose the option.

The unintended consequence can occur when an EUC claimant can establish a second benefit year and is eligible for regular UI due to part-time or temporary work.  Under the second benefit year claim, many claimants were qualifying for a lower weekly unemployment benefit amount than they received for EUC or their original regular UI claim, because the part-time/temporary earnings were lower than their earnings used to establish the original claim.

In order to "fix" this unintended consequence, Section 502 of HR 4213 provides for the following options for continued payment of EUC instead of regular UI

If—

‘‘(A) an individual has been determined to be entitled to emergency unemployment compensation with respect to a benefit year,‘‘(B) that benefit year has expired,‘‘(C) that individual has remaining entitlement to emergency unemployment compensation with respect to that benefit year, and‘‘(D) that individual would qualify for a new benefit year in which the weekly benefit amount of regular compensation is at least either $100 or 25 percent less than the individual’s weekly benefit amount in the benefit year referred to in subparagraph (A), then the State shall determine eligibility for compensation as provided in paragraph (2).

“(A)The State shall, if permitted by State law, establish a new benefit year, but defer the payment of regular compensation with respect to that new benefit year until exhaustion of all emergency unemployment compensation payable with respect to the benefit year referred to in paragraph (1)(A); ‘‘(B) The State shall, if permitted by State law, defer the establishment of a new benefit year (which uses all the wages and employment which would have been used to establish a benefit year but for the application of this paragraph), until exhaustion of all emergency unemployment compensation payable with respect to the benefit year referred to in paragraph(1)(A); ‘‘(C) The State shall pay, if permitted by State law— ‘‘(i) regular compensation equal to the weekly benefit amount established under the new benefit year, and‘‘(ii) emergency unemployment compensation equal to the difference between that weekly benefit amount and the weekly benefit amount for the expired benefit year; or ‘‘(D) The State shall determine rights to emergency unemployment compensation without regard to any rights to regular compensation if the individual elects to not file a claim for regular compensation under the new benefit year.’’.

Three key points to keep in mind about the "fix" and the options: 1) A "fix" is only applicable to claimants whose regular weekly UI benefit amount in the new benefit year would be at least either $100 or 25% less than their original weekly UI amount; 2) the legislative provisions are not retroactive and only apply to claimants whose benefit years expire after the date the legislation was enacted (July 22, 2010); and 3) only state UI agencies may choose one of the four available options, not claimants; a state must only choose one option and apply it to all applicable claimants.

In case you missed it, here is some information on Unemployment Insurance Benefit Integrity that you should be aware of.

Tammy Mullin

Job seekers are struggling with more than a reduction in the number of available jobs.  Marketplace disruption has created a situation where we are seeing some serious declines in certain industries such as manufacturing as well as declines in certain job types such as call center support.  As human beings we have a tendency to seek out situations within our comfort zones and choosing a job is no different.  We are all naturally inclined to seek a new job that closely resembles our old job.  The problem being that in declining industries those jobs aren’t very plentiful. 

Employers faced with a layoff situation can help their exiting employees get back to work more quickly by giving them some direction regarding how their skill set matches up against alternative positions or industries which are hiring.  As an example, we recommend that job seekers coming off a manufacturing line also look for jobs in the energy field, an industry that is expanding.  HR Professionals, in particular, hiring managers, are in fact in a really great position to be able to do this because they spend quite a bit of time matching skills to job descriptions.

Ideally, if you provide your exiting employees with access to a professional job coach they could work with their coach to more closely match their individual transferable skills.  If that isn’t provided, or for those employees that choose not to take advantage of that benefit, simply adding some information to the employee exit packets about where they can look for their next job can go a long way toward giving them a much needed head start in their job search.   

Tammy Mullin

The following information was released to TALX clients in South Dakota last week.

Situation

The state of South Dakota’s trust fund is no longer insolvent. Their $24 million Title XII Federal loan has been repaid. In addition, the balance in the trust fund as of June 30, 2010 was $15.9 million triggering a reduction in the surcharge that has been in place since the fourth quarter, 2009. The surcharge is decreased from 1.0% to 0.1% effective with the third quarter, 2010.

The trust fund has been increasing as a result of the passage of SB186 and HB1018 during the 2010 legislative session. SB186 reduced the surcharge amount for 2010 and 2011, increased the taxable wage base and created a new tax rate table with higher rates for employers with negative account balances. HB1018 brought $11.7 million in federal funds to the trust fund while expanding benefits for workers in state-approved training for high-demand occupations.

What Employers Need to Know

This increase in the trust fund balance means employers’ tax rates for the third quarter, 2010 are decreased by 0.9%. The balance in the trust fund is projected to increase above $16.5 million as of September 30, 2010 eliminating the surcharge all together and reducing employers’ tax rates another 0.1% for the fourth quarter, 2010. This fourth quarter change will not be official until sometime in early October. Another notification will be issued at that time.

The lower surcharge rate will appear on your paper quarterly unemployment report or when you file on the internet.

Tammy Mullin

Identity theft is a major problem in the U.S., worldwide actually.  Who hasn’t received one of those emails saying “I’ve decided to leave my fortune to you”?  I get at least a couple a day.  It’s a shame that there are people out there who prey on the unsuspecting that way.  Recently, we have been seeing more of a new twist on identity theft, stealing a person’s identity to collect unemployment benefits.  Four people in New York recently stole the identities of more than 100 former workers in order to file for and collect unemployment which resulted in close to $95,000 in false payments. 

Scamming the unemployment system isn’t new, but it has become more lucrative.  Since most states have triggered extended benefits and with the federal unemployment extensions, someone making a fraudulent claims could theoretically collect as much as $30,000 per identity stolen which seems to make it more worth the risk to some.  We are definitely seeing and hearing more about identity theft issues these days.

This rise in identity theft fraud is putting further strain on an unemployment system where more than half of the state funds today are insolvent.  They are borrowing from the federal government in order to pay out benefits which come at a high cost to employers who start to lose FUTA credits if loans aren’t paid back in time and also could see interest costs start to accrue.  All of this ends up coming out of the employer’s pockets and frankly out of the claimant’s pockets as well.  Given the poor state of unemployment trust fund affairs these days, legislators are forced to not only increase employer taxes to bring in new revenue, but start to decrease benefits by reducing payments or making them harder to qualify for.

What can employers do to help?  Fraud is hard to catch, particularly when 2 or more individuals are colluding, but employers can very carefully check their charge statements and if anything does look out of the ordinary, contact their state’s unemployment office to report it.  It won’t stop identity theft fraud in the unemployment system, but in these tough times, every little bit helps, right?!!

Tammy Mullin