In a 2010 BLR webinar entitled "Unemployment Taxes and Claims: How to Reduce Your Costs and Effectively Contest Claims," Ronald Adler, president and CEO of Laurdan Associates, Inc., outlined ways employers can reduce their unemployment expenses.
Adler advised employers to:
- Designate a single person in your HR department to handle unemployment issues. "You'll enjoy more success tracking and managing these costs if you have one person in charge of learning the ropes and the loopholes and tracking terminations and claim filings." (A large employer may need a team of people dedicated to these tasks.)
- Audit your claims carefully and regularly.
- Keep unemployment records on hand for several years. Many experts recommend that you retain these files for at least four years.
- Be careful to distinguish "quits" from "discharges." "It's not always clear whether a former worker quit or was fired," Adler said. "Generally, the party who moved first to end the employment relationship counts. For example, if you ask an employee to resign, you have moved first and the departure will be considered a discharge."
- Always pay your unemployment taxes on time. Not only will you be assessed penalties and late charges in most instances, but you could lose benefits as an employer in some cases.
- Ask about "buying down" your high unemployment tax rates. Some states will allow employers to offer voluntary unemployment tax contributions, above their assigned tax rates, to apply toward a recalculation of those rates. Check with an unemployment tax consultant or your attorney for more details.
- Learn about loopholes.
- Rehire former employees collecting benefits before you hire brand-new workers. Doing so will reduce the benefits charged to your unemployment account.
- Claim corporate officer exemptions. Most states will exempt you from paying unemployment taxes on corporate officers, with some exceptions. You will still be liable for federal unemployment taxes on these officers.
- Work with a third-party unemployment tax administrator. The average awarded unemployment claim can cost an employer several thousand dollars—but you can hire a third-party administrator with experience in this area for much less to counsel you on your entire workforce. Many of these companies will audit and monitor your unemployment claims and rates and represent you in hearings and appeals.
Ronald Adler is president and CEO of Laurdan Associates, Inc. www.laurdan.com, a human resources management consulting firm specializing in unemployment insurance audits, consulting, research and expert witness testimony. Contact him at email@example.com.