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March 21, 2010
Using Audits, Records and Loopholes to Control Unemployment Costs

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., detailed how paying attention to the details of audits, record-keeping and loopholes can help employers reduce their unemployment expenses.

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Adler’s advice:

  • Audit your claims carefully and regularly. Many states will automatically send you a periodic—quarterly or annual—statement summarizing the charges made against your unemployment account, but some states send these statements only when you request them. Make sure you receive these statements as often as possible, and go through them very carefully. Check each claim for any discrepancies in terms of eligibility, benefit period, benefits paid, and benefits charged to your account. If you find inappropriate charges, request an adjustment in writing immediately—and follow up on future statements to ensure that the adjustment was made.
  • Keep unemployment records on hand for several years. Many experts recommend that you retain these files for at least four years. Not only will they come in handy if you need to review your unemployment track record later, but they can even help you in situations such as wrongful termination lawsuits. "If a disgruntled employee loses his unemployment benefits request due to misconduct, that ruling will help you defend yourself if he goes to court later."
  • Learn about loopholes. For example, if you're required by law to separate an employee for some reason, or if an employee was separated due to a verifiable medical condition, you will generally not be charged for those unemployment benefits—even if the state ends up paying them to the former worker. Also, you should consider paying wages in lieu of notice (as opposed to severance pay) in some states to avoid being charged for benefits. Many states don't charge employers for benefits (even if they're paid to workers) in catastrophic situations such as fires, floods, or other disasters that close or severely affect your operations.

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 radler@laurdan.com.

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