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When the unemployment compensation laws were originally enacted in the 1930s, the intent was to provide a supplement to individuals who were unemployed through no fault of their own.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

The national unemployment rate is currently 9.8%. The number of individuals claiming unemployment has placed a substantial strain on state unemployment trust funds. In January 2008 the national unemployment rate was 4.9%. Unemployment benefit payments have more than doubled while tax revenues have decreased. Given this scenario, many states are finding it difficult to maintain solvent trust fund balances and have been forced to take Federal Title XII loans. In response to the current economic situation, states have passed legislation to increase tax revenues to replenish depleted trust fund balances.

The following states have passed legislation in order to boost revenues:

Florida – SB 810 increases the taxable wage base from $7,000 to $8,500 for tax years 2010 through 2014 and changes the rules for calculating the final and variable adjustment factors used in tax rate calculations.

Indiana – HB 1379 increases the taxable wage base from $7,000 to $9,500 and institutes a new set of rate schedules to be used beginning in 2010. The penalty rate has also increased from 5.6% to 12.0% in 2010.

New Hampshire – SB 129/LSR 998 increases the taxable wage base from $8,000 to $10,000 for 2010, $12,000 for 2011 and $14,000 for 2012 and beyond. In addition, another 0.5% surcharge, on top of the 0.5% mentioned below, will be added to all employers’ rates and a 1.5% fund balance increase will be added to all negative balanced employers’ rates effective for at least the first and second quarters, 2010.
Due to a low state trust fund balance, an emergency 0.5% unemployment tax surcharge will be applied for the remainder of 2009.

South Dakota – Due to a low state trust fund balance, an emergency 1.5% unemployment tax surcharge will be applied to employers on taxable wages paid 10?1?09 through 12?31?09. This surcharge is expected to remain in effect through at least the second quarter, 2010.

Tennessee – HB 2324/SB 2315 increased the taxable wage base from $7,000 to $9,000 retroactive to January 1, 2009 and increased unemployment tax rates by 0.6% effective January 1, 2009. The 0.6% increase is expected to remain in effect through at least the second quarter, 2010.

Vermont – HB 442 increased the taxable wage base from $8,000 to $10,000 for tax year 2010.

West Virginia – SB 246 increased the taxable wage base from $8,000 to $12,000 effective second quarter, 2009.

TALX has a team dedicated to track and monitor pending and new unemployment tax legislation. Our tax experts can assess how legislative activity will impact unemployment taxes. Employers who are forecasting the impact of legislative changes on 2010 unemployment costs will avoid unexpected tax increases and budget variances throughout the coming year.

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

HR Service Matters: By: Mike Smith

At our recent Client Advisory Board (CAB) meeting we had a great opportunity to hear from our clients and communicate key initiatives currently underway at TALX.  Our CAB is now in its 7th year and our members represent the executive levels of HR/Payroll/Benefits/Tax within their organizations. 

These in-person meetings always include a time to discuss important issues that member organizations are encountering.  Many members mentioned the cost reduction focus taking place at their companies and one commented that the HR team was asked to look in some areas that they had never looked at before for cost savings.  Several mentioned salary freezes and we also heard that 401(k) matches are being reduced. In the midst of all of these issues was the common theme of keeping employees happy.

I’m sure these issues are most likely representative of many HR teams across a wide range of industries. While a recent Watson Wyatt survey (link below) reflects that a growing number of employers are planning to lift their salary freeze soon, employees still feel the sting.

http://www.watsonwyatt.com/news/press.asp?ID=22602

In these tenuous times it is important to let employees know how they too are helping manage costs beyond their pay freeze.  For example, many HR service initiatives have a solid cost reduction component.  Making these cost savings more visible to employees can help them understand how their utilization of HR services is making a significant contribution.  In addition, many paperless employee services support the organizational goal to be more “green.” This represents yet another opportunity to tout how employees are making a difference while promoting the scope of all HR services initiatives.

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