Strategies for Reducing Your Company’s Unemployment Insurance Costs

Unemployment insurance (UI) is a tax paid by employers into a state fund to provide temporary cash benefits to workers who become unemployed through no fault of their own. It is also sometimes considered a hidden cost simply because many employers don’t know how to control these costs.

Want to know more about UI? Check out our post, “Unemployment Insurance & Your Business,,” for a deep dive into what UI is and your rights and responsibilities as an employer.

Below are several tips for lowering your company’s UI costs:

1. Pay UI Taxes on Time

Employers that don’t pay their UI taxes on time are charged an additional surcharge penalty. Paying your taxes on time is the easiest way to minimize UI costs.

2. Develop Clearly Written and Communicated Policies

If a former employee files an unemployment claim, you might need to prove he or she was terminated for cause in order to avoid paying for a baseless UI claim. A well-communicated policy with a signed employee acknowledgment form can help when disputing these claims.

When was the last time you checked your employee handbook? Download our Employee Handbook Checklist to make sure you have everything you need.

3. Always Respond to Claims and Audits

When investigating claims, the unemployment office is looking for whether the claimant is culpable or had knowledge of the expectations, as well as if the circumstances leading to termination were in the claimant’s control. Employers should make sure to address all three of these items when reporting the reason for termination.

4. Take Consistent Disciplinary Action

Consistency and documentation are both key when it comes to disciplinary action (up to and including termination). Keep accurate records of any policy violations or bad behavior along with employee acknowledgment of the warnings or write-ups. This way you have a record demonstrating the employee knew what the expectations were.

5. Hire Carefully

High employee turnover can have a huge impact on your UI rate, so hiring people who are likely to stick around and succeed at the job is crucial. If it becomes apparent that someone isn’t a good fit for the position, however, terminating a new hire sooner rather than later can minimize the impact on your UI rate.

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6. Use Your Right to Appeal

If you disagree with the state agency’s decision to grant UI benefits, don’t forget that you can appeal it.

7. Seek Expert Help

If your company is struggling to manage its UI claims or costs, don’t be afraid to seek out the help of experts in your own HR department, a UI management services, or a professional employer organization (PEO). Partnering with a PEO, in particular, can be especially beneficial as your company may be able to take advantage of the PEO’s low UI rate to minimize its UI costs.

The information above from taken from an article written by Sean O’Donnell, Human Resources Manager, West Region for G&A Partners, published in Issue 2 of the Utah Asphalt Pavement Association “On the Road” publication.