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Part I: Introduction

This three part series details some of the reasons why many companies should consider putting more into unemployment insurance (UI) claims management and how to more effectively challenge benefits claims.  Many employers do not spend much time managing UI claims.  Sometimes the reason is because the office is busy and staffing is low: there’s nobody available to deal with it.  Other times, it’s because the cost of unemployment insurance is underappreciated.  Another reason is that many employers have simply given up on the process.  Commission investigators may seem highly anti-employer and the appeal process sometimes seems unfair.  However, armed with some knowledge about how the system works, you can greatly improve your odds at successfully challenging a claim.

Many finance people ignore the potential for cost containment when it comes to UI payroll taxes.  The economic rationale for doing little or nothing about UI claims usually comes from either or both of two misperceptions: (1) UI payroll taxes are simply a cost of doing business like any other tax, and/or (2) UI coverage does not cost enough to bother with.  Naturally, if you have low turnover or a small headcount relative to your revenue stream, perhaps managing UI claims is not going to do much for your bottom line.  But if you have a large payroll, or a large number of employees, or high turnover, there is a lot of money at stake.  Tomorrow’s discussion will address some actual numbers to put this in perspective.

Also, there are other, less easily measured factors that you should consider before giving up on UI claims.  Chief among those is your company’s reputation.  Getting a reputation as an employer who does not contest UI claims has a negative effect on recruitment because it attracts bad applicants.  Your recruitment pool swells, which increases the cost and complexity of your selection process.  Moreover, the pool has ballooned with low quality applicants, increasing the cost of a hiring mistake. 

Tomorrow’s discussion will address some of the other, more severe consequences.  We will begin by getting into more details concerning cost and reputation. Then, we will begin our discussion about how to effectively challenge UI claims by introducing the central rule of UI claims administration.