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As RI employers, unemployment insurance affects us all. Last week, I explained how unemployment insurance costs are calculated for RI businesses. This week, let me give you some specific ideas for controlling those costs.
The most controllable component of how much unemployment insurance your business will pay is your experience rating. Efforts to minimize the cost of unemployment insurance should be focused on this area. Some things to pay attention to as you try to improve your company’s experience rating:
- Outsource or Use Contractors – If there are things that are not part of your business’ core competencies or are special projects that have an end date, consider outsourcing or hiring an outside contractor. You don’t need to pay unemployment insurance on contract labor.
- Hire better – Take the time necessary to hire right and save yourself the pain and cost of terminating employees whose unemployment benefits may be deducted from your Employer Account. Be disciplined in conducting reference and background checks and institute an interviewing rating system to normalize the opinions of interviewers.
- Review your “Notice of Benefits Paid” statement – This is sent by the RIDLT monthly to all employers whose accounts have been charged with benefits during the preceding month. Make sure there are no errors and that claims paid are for individuals who were your employees. Unemployment fraud is common, so take the time to review this statement.
- Respond to all Requests from RIDLT related to Unemployment Claims – When a former employee files a claim for unemployment benefits RIDLT sends a form to all employers who reported wage payments to the individual in the base year period. It is important that you take the opportunity to explain the reason for termination or separation and to provide appropriate documentation to substantiate your position. No response by an employer will result in the award of benefits in the former employee’s favor. Obviously if an employee’s claim is legitimate, then don’t waste time or resources trying to reject the claim.
- Train Managers and Institute Appropriate Disciplinary Procedures – Many times, unemployment claims can be avoided by training managers about how to handle employees’ performance issues and by instituting and adhering to a formal disciplinary process.
- Appeal decisions as appropriate – If a former employee’s claim is awarded and you feel it is inappropriate, you may file an appeal. It is important that if you appeal you have good documentation and attend all requests from RIDLT to present your position.
- Consider part-time work schedules – If the reason for termination is related to a business downturn and reducing labor costs is deemed an appropriate response, consider alternatives to out-right layoffs. In some cases, employees may be willing to work a reduced schedule, especially if the downturn is expected to be short-lived. By reducing an employee’s hours from full to part-time, you will minimize the deductions from your Employer Account
The bottom line is that while we can’t avoid some cost for unemployment insurance, there are specific strategies we can use to gain better control over these costs.
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