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Checklist Limit Unemployment Insurance Liability

June 18, 1999
Related Topics: Miscellaneous Legal Issues, Finance/Taxes, Termination, Featured Article
Issue: A medium-sized business is considering discharging one of its employees, who has been absent for 28 days and been involved in numerous altercations in the office. What can the company do to ensure that its experience-rating remains good in the event it decides to go ahead with the discharge?

Answer: Use the following checklist as a guideline for limiting state unemployment insurance liability:

  • Be aware of your state’s experience-rating system.
  • Understand how your account may be charged. Guard against the making of improper charges to the experience-rating record.
  • Become familiar with the noncharging provisions of the UI state law. Contest improper claims lodged against your account quickly and effectively.
  • Carefully check over the statement of accounts furnished by the state agency that reflects the charges on account of benefits paid to employees. Errors can be made.
  • If the rate has been incorrectly determined, notify the state agency immediately.
  • Do not allow unsatisfactory employees to build up base-period wage credits. This can increase the potential charges to an employer’s account in certain states.
  • After hiring new employees, carefully follow their progress and dismiss them promptly if they prove unsatisfactory. The longer an inefficient employee remains employed the greater the potential charges against the company’s experience-rating record will be.
  • Do not allow weeks of partial unemployment to become "waiting period" weeks. You may want to plan temporary layoffs so that the waiting week will be a week of total unemployment, thus possibly reducing the amount of benefits charged to your account.
  • Give every employee who leaves a separation interview. Inquire carefully into the reasons for leaving the company or the circumstances surrounding the dismissal. Remember, in most states every employee who leaves for whatever reason may represent a future benefit charge.
  • Keep accurate records concerning the circumstances surrounding an employee’s dismissal or leaving. If possible, secure a signed statement from the employee as to the reasons for leaving.
  • Notify the separating employee at the time of separation of his or her rights to unemployment insurance. You should also stress your intention to protest any unjustified claim that the worker might later file.
  • Carefully check and reply where necessary to all notices concerning benefit claims, benefit charges, rate determinations, or requests for separation information.
  • In supplying separation information, you should use the form supplied by the state agency rather than writing a letter. Include the exact reasons for the separation, giving the facts accurately and completely.
  • File reports and pay contributions on time. Many states deny experience rates to employers that are delinquent in filing reports and/or paying contributions.
  • Estimate the effect of future charges to your account. Very often, one benefit charge may be sufficient to throw the employer into a different, higher rate classification.
  • Preclude employees from receiving unemployment benefits if they are receiving any other form of compensation from the company.

SOURCE: CCH Incorporated is a leading provider of information and software for human resources, legal, accounting, health care and small business professionals. CCH offers human resource management, payroll, employment, benefits, and worker safety products and publications in print, CD, online and via the Internet. For more information and other updates on the latest HR news, check our Web site at

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion.

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