Unemployment Rates and Ex-Employee Issues

Unemployment rate changes are coming out all over the country.  Some changes are fair and many are not. Do you know the steps to take if you want to fire an employee, and how to handle the unemployment insurance claims when they come in?

Unemployment rates change every year whether you have had a claim or not.  

If an ex-employee has filed a claim and been awarded benefits your rate is going to go up.  
The more benefits claimed and charged back against your employer account the higher your rate is going to be.  Remember unemployment insurance costs fall solely on the employer and the benefits accrue only for the employee.  That is why it is important for you to properly handle your terminations to prevent chargebacks.  

Remember unemployment insurance costs fall solely on the employer and the benefits accrue only for the employee.

If you handle your terminations properly then you need to fight every claim that an ex-employee files to keep your rate to the minimum possible.  Even if you don’t have a claim your rate may change because the rates within the State change to keep enough money flowing in to cover the administrative budget of the department. Lucky you...not.

If you fire an employee for cause then they are not generally entitled to benefits.  

You have to be able to prove cause to an administrative law judge if you claim cause for termination and the employee objects.  Cause varies from State to State.  You need to know what your State considers cause.  You also need to consider what it will take to prove cause to an administrative law judge who is employee by the unemployment department in your State which is subsidized by the US Department of Labor.  No one at the department is on the side of the employer.  

Proof needs to be written and persuasive.  It needs to show that the ex-employee violated the rules of the company as laid out in the employee handbook.  You need to show that the employee was aware of the handbook and has acknowledged in writing that they have read it and agreed to it. The manual has to comply with Federal and State law to what you can require from an employee.  

There are programs that can help you write a legal employee handbook.

They are available on the internet for far less than the cost of one unemployment claim. Here are some links to a few resources:






Society of Human Resource Management

When you present the Employee Handbook to your employee, be sure to include an extra document that states their acknowledgment and signature. Two copies should be signed, one for each of you. Here is some example text:


I hereby acknowledge receipt of the {Organization Name} Employee Handbook. I understand that it is my continuing responsibility to read and know its contents. I also understand and agree that the Employee Handbook is not an employment contract for any specific period of employment or for continuing or long-term employment. Therefore, I acknowledge and understand that unless I have a written employment agreement with {ORGANIZATION NAME} that provides otherwise, I have the right to resign from my employment with {ORGANIZATION NAME} at any time with or without notice and with or without cause, and that {ORGANIZATION NAME} has the right to terminate my employment at any time with or without notice and with or without cause. I have read, understand and agree to all of the above.

I have also read and understand the {ORGANIZATION NAME} Employee Handbook. I agree to return the Employee Handbook upon termination of my employment.

Signature _____________________________________________

Print Name ____________________________________________

Date ________________________

Source: http://www.nonprofitmaine.org/wp-content/uploads/2006/12/Sample-Employee-Handbook.pdf


Steps you should take when you want to fire an employee.

The rule of thumb to protect your company when you want to fire an employee is to give a verbal warning and two written warnings. When you give a verbal warning you should also have them sign a document that states that you gave them a verbal warning for acknowledgment purposes. It is also always good to have a witness on hand to avoid a he-said-she-said situation later. 

You then need to show that the ex-employee violated the rules in the handbook.  

You need to show that you have counseled the ex-employee on the violation, more than once.  The counseling needs to be in writing with a witness and with the employee signing off on the counseling session.  Each counseling session needs to be more and more formal and stricter with the rule violation carefully laid out and explained.  The consequences of additional violations and in what period of time need to be specifically explained.  You can’t fire someone for being two minutes late one time.  But if they are regularly late and that is a handbook violation and it is important in the scheme of your business then you can fire them.  If it is an illegal rule, a frivolous rule or one that does not affect your business the Judge may rule against you no matter how much proof you have.  They may rule against you anyway because that is the way they roll sometimes.

GetPayroll Payroll Academy - State Unemployment Insurance

You need to protest every claim for benefits.  

If you don’t your rate will go up.  If you don’t protest a case that ex-employee may take advantage for however many weeks the government is giving at that time (it has been as much as two years at one point).  You will end up with an increase in rate designed to make you pay that amount back to the State in the next three years.  Protest even if you don’t have adequate proof.  If the ex-employee does not show up for the hearing and you do, you win.

Understand that there are people who deliberately get fired so they can claim unemployment benefits.

In some States, it is quite lucrative to do so.  The ex-employee might take advantage of the situation and work somewhere else as a contractor or get paid under the table where their income does not get reported. Usually, the person hiring them has no idea they are collecting unemployment.  You still have to pay the State back for the benefits that they have received through fraud.  Next time you will remember to fight and appeal, appeal, appeal!  If you find an employee is taking benefits and you know they are working report them to the fraud section of the unemployment department.  They may not do anything but sometimes they actually do investigate.

Have you received your Unemployment Rate for
2017 yet?

Have you sent a copy to your payroll provider?  Whether they go up or down your provider needs to know so they can properly calculate and pay your unemployment taxes.  

For more information on State Unemployment and Labor Laws, visit this website and click on your state.


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