No matter your company’s size, your niche, or your location, it’s inevitable that at one time or another you’ll likely have let an employee go. This is rarely an easy decision to make– and the process of executing is often much harder than that.
No matter your reason for letting your employee go, there are some very important things you need to keep in mind when a former team member officially becomes “unemployed.” In many cases, your now-former employee is entitled to certain unemployment benefits. There are many resources at their fingertips to help them file a claim, and potentially begin drawing unemployment revenue.
But what about you, the business? It’s never your intention to willfully put someone in a bad position, but if letting someone go is necessary, you should also know your rights, responsibilities, and what the process is for you as a company.
In this guide, we’re going to walk you through some key information when it comes to unemployment insurance claims, and how to navigate rising unemployment insurance rates.
No matter what your human resources tech stack and platform is, Quentell will help you learn what questions you should be asking.
What Happens When a Former Employee Makes an Unemployment Claim?
Typically, when you let an employee go, one of the first things they’re going to do is file an unemployment claim. We’ll go into detail about exactly what happens when a former employee files a claim, but first, let’s cover some important, foundational basics. From an employer’s perspective, here are a few things that you should know about unemployment claims management.
Unemployment Claims 101
Firstly, when it comes to actually paying out unemployment claims, this is only supposed to occur when an employee loses their job for reasons that are beyond what they can control. This is commonly due to things like being laid off or cut due to downsizing, being relieved after seasonal work, or when a company goes out of business entirely.
When an employee files to get unemployment benefits, that’s when unemployment insurance– often abbreviated to UI– comes in. UI is what helps to pay these people while they seek their next steps. UI helps people stay afloat with some financial help, but what does it mean for you, and how much does it cost?
Typically your UI payments are going to be calculated by taking an individual employee’s income and then taking a percentage of it over the course of 52 weeks.
As that percentage accrues, if that employee is let go, claims can be made against the total amount for a specified amount of time (typically around 6 months or so after the employee is no longer with the company). Unemployment benefits also typically cease once the former employee finds new full-time employment.
So Who Makes UI Rules and What Are They?
This is a great question, and the answer might seem a little complicated at first– but stick with us, and we’ll guide you through everything.
Now the tricky part is that FUTA is actually controlled jointly by both the federal and state government. So this means that in addition to the national federal rules, it’s very possible that your territory, district, and or state has its own set of regulations and rules.
What in the World is FUTA?
Firstly, the general guidelines and regulations for how unemployment insurance is handled is dictated by the Federal Unemployment Tax Act (commonly abbreviated as FUTA).
At the federal level, the government chooses to collect unemployment money using the following mathematic formula:
FUTA = 6% of the first $7,000 paid annually to each individual employee
In addition to that amount of tax, your business also needs to fill out and submit Form 940 and submit it to the Internal Revenue Service (IRS) every year.
Okay, So Now What in the World is SUTA?
Secondly, the general guidelines and regulations for how unemployment insurance is handled by each state can vary. But no matter the rate, each state collects its unemployment funds through the State Unemployment Tax Act (commonly abbreviated as SUTA).
Note that SUTA is also sometimes called state unemployment insurance
When it comes to the amount that you need to pay for SUTA, each state tends to determine that for themselves. So depending on where you’re located, your rate is likely going to be different. In some states, the regulations state that employees have to pay toward state unemployment taxes, in other states they do not.
Who Pays Unemployment Taxes?
That is a great question. Commonly, unemployment taxes are made up of the funds collected through the Federal Unemployment Tax Act (FUTA) and the State Unemployment Tax Act (SUTA), which are almost exclusively paid by companies/employers. There are some exceptions to this, and some states require employees to contribute to their unemployment taxes as well.
UI Claims Can Be a Costly and Complicated Landscape
If all of the FUTA and SUTA math sounds like a lot to keep track of, know that you’re right, and it is. Also, know that here at Quentelle, we can help you navigate UI situations expertly… but more on that later. Let’s continue to learn more about how you can equip your business to handle claims.
What Happens After an Employee Files a Claim?
Typically when a former employee files for unemployment, when their claim goes through you’ll receive something called a “Notice of Unemployment Insurance Claim Filed.”
This notice is a letter from the state where your business is located in. Remember that this notice isn’t an automatic ruling in favor of the person filing unemployment– it’s just your formal notification they are filing in the event you disagree with the claim.
At this point, you have the option to either accept or contest the unemployment claim. Read on for more details on what that means, and what you need to do either way.
Accepting Unemployment Claims
If a claim is legitimate, we recommend that you accept it, and don’t contest it in any way. If you’re wanting to be sure that a claim is above board and valid, there are a few things to keep an eye out for.
First, was this person let go for reasons outside of their control? Or did you let this person go because of financial issues within the company? (That is a telltale sign.) On that same note, did you lay this person off because there just wasn’t enough work to go around? Finally, there are some cases where employees may lose their jobs because of an error that you or the company made– in that case, they’re typically entitled to unemployment.
If a claim is accepted by you, the state will come to its formal decision on whether or not they deem the person eligible for unemployment benefits.
Contesting Unemployment Claims
So what happens if you receive your “Notice of Unemployment Insurance Claim Filed” letter, and ask yourself the questions in the above ‘Accepting Unemployment Claims’ section. But your answers lead you to the conclusion that the claimant has no right to unemployment benefits? You still have options. Here are some other things to ask yourself.
Did you have to terminate the employee for any sort of misconduct or violations of policy? Was this person an independent contractor? Did the employee quit for another employment opportunity that didn’t pan out? Was anything on the unemployment claim untrue?
If you answered yes to any of those questions, you likely have a solid, justified reason to contest this person’s unemployment claim.
How Do I Contest a Claim?
It’s typical that all unemployment claims will be handled by your state’s unemployment department. To formally contest any unemployment claims, you need to contact them for the next steps.
They will typically ask you for the specifics of the situation. When you contact your state’s unemployment department about an unemployment claim, you should have the following information about your former employee ready:
- Why is the individual is no longer with the company?
- What was their pay rate/compensation plan?
- What was their job title?
- Other details about their role, and your company
Note that the unemployment department takes claims very seriously, and follows a specific and rigorous unemployment claims process. You will need to provide clear, specific, and in-depth information on any unemployment claims you wish to contest.
Note that each state handles its unemployment claims processing differently. The most typical method they prefer for contesting a claim is a letter. If your state agency does prefer a letter, it’s important that you send it within the timeframe that’s mentioned on the initial “Notice of Unemployment Insurance Claims Filed.”
If you don’t respond to the unfit claim within the timeframe on the notice, you will potentially have your unemployment tax rate increased, and in some cases other penalties as well.
Where Do Furloughed Employees Fall?
This may seem like a gray area since it’s typical that any furloughed employees often retain all benefits and are able to transition easily back into their existing roles. However, even though they are technically not terminated, furloughed employees are often eligible for unemployment claims benefits. Don’t automatically contest the unemployment claims that have been filed by employees who are furloughed, and instead look into the details of the matter more deeply before you make a decision.
What Happens Next?
When the state reaches its final decision as to whether or not a person will receive unemployment benefits they’ll send another letter– this is a letter of determination– to you and the former employee who filed the unemployment claim.
If the state rules during the unemployment claim’s processing period that the employee you let go is eligible for unemployment benefits, there’s little you have to do. Once this ruling is passed, the funds will start coming from your business’s unemployment tax account.
If for any reason the state denies the unemployment claim, the person filing (known as the claimant) has the right to appeal this decision.
Your UI Insurance Rates May Increase
Note that in some cases, once you accept one or more former employees’ unemployment claims, your unemployment tax rate may increase. This is an unfortunate side effect of an unfortunate situation, but again, we encourage you to accept any legitimate claim, even if it means an increase in your taxes.
Employment Verification in this Complicated Landscape
A note for hiring managers and HR departments to consider. As unemployment numbers increase, people are more willing to bend the truth when it comes to their resumes. Applicants can’t typically survive on an unemployment wage alone and are willing to become very competitive to get a position.
You also don’t want to hire someone who won’t be a long-term asset to your company, and who is just looking to land something because they’re desperate. Employment verification systems allow you to get accurate, specific information about people before you hire them.
When you look at someone’s actual job history you’ll be able to see employment gaps, specific dates and roles, and other details that will help you make an educated decision on every person who joins your team.
From Paper to Digital: How the UI Claims Processed Has Evolved Over the Years
Unemployment insurance is likely older than you think. Let’s take a look at some of its history to truly observe its roots, and how it is meant to be used.
The Old Way: The Birth of Unemployment Claims
In truth, the true genesis of unemployment insurance was born out of the Great Depression. In 1929, the nation saw an intense economic depression which led to many people being unemployed. In fact, it got so bad that many people were considered “permanently unemployed”– and while the terms weren’t always literal, they might as well have been.
The economic downturn saw many moving transiently from job to job, sometimes with an especially long period in between. In many cases, the job market was so saturated and competitive that there were literally no jobs left, but millions still needed employment.
Over time as the nation began to rise again to some sort of financial normalcy, the general public and the Federal Government alike came to realize that there was a very real issue called “unemployment” and they began to take action.
During the depression, the Federal Government spent around $7,000,000,000 on work relief programs, with local and State governments pitching in about $1,500,000,000.
This unemployment relief began to make a difference, though it was a primary reason for many government deficits at that time. Thus the concept of unemployment was born and enacted in its infancy.
Over time, the nuances of unemployment insurance have changed– arguably every year since its creation. Various State laws and Federal requirements have shifted consistently to grow and change with the needs of our current economy.
In the past 50 years alone there has been much experimentation at the state level to try to find new methods of running the unemployment insurance system.
Over time, the growing pressures and higher costs have strained the unemployment insurance system– especially during times of uncharacteristically high unemployment levels.
During these times, high benefit payouts have encouraged states to raise their taxes above the Federal level– even with the Federal amount now being $7,000 (this was the last increase, which happened in 1985).
UI Claims In An Analog Time
Until not too long ago, all unemployment claims management was done using cumbersome, analog methods. As late as the mid-2000’s people who wanted to file for unemployment needed to drive to an Unemployment Office in person and speak to an officer for assistance.
From there much of the process was handled on paper, with those who were unemployed calling into a phone system to get and receive updates.
The same clunky, analog methods were used for handling unemployment claims for businesses. The whole process for any business owner or HR Department was time-consuming, not entirely reliable, and moved at a glacial pace.
Whether you were an employee or an employer, handling unemployment claims was a known pain that no one looked forward to.
UI Claims Enter the Digital Era
We’ve officially entered a new era when it comes to the secure, fast, digital capabilities of handling unemployment insurance claims in the digital era of today.
Handling your UI claims digitally has never been simpler and more automated. However, it’s important that you choose a provider carefully.
You need to be certain that your digital UI partner can provide you with simplified unemployment claims management that’s powered by data, uses the very best in class technology, and has unparalleled expertise when it comes to UI claims.
Here at Quentelle, we offer all of those things and more. We would love to show you how we can help simplify your unemployment claims management process and bring you into the modern era safely and securely. We also want to warn you against technical debt…
Technical Debt From Legacy Systems
Sadly, even with the incredible advances in secure, simple UI technology, many companies are still handling their unemployment claims like it’s 2007. Many companies are stuck doing things “the way they’ve always done them,” and sadly are missing out on worlds of security, speed, and accuracy.
Some of these companies who are in “technical debt” because they refuse to move away from legacy systems feel the pain of this decision with the multiple unemployment claims they have to deal with manually.
In fact, if we take a good hard look, the way that some companies handle their unemployment claims process is the oldest and least updated aspect of their business. It’s akin to sticking with a fax machine in the world of the internet. And yet, many still choose to do so.
If this sounds familiar, we want to let you know that it doesn’t have to be this way.
The Current Landscape of Digital HR – Platforms Employment Verification and Tax Impacts
While handling your unemployment claims is a major benefit of using a digital HR platform like Quentelle, that is only one of the key benefits that you can experience.
Digital HR Means Data to Analyze
In the current landscape of digital human resources tools, when you use modern tools, you’re going to take your old processes and make them faster and more secure… but that isn’t all.
Speed and security are important, but another invaluable aspect of taking your HR suite digital is the ability to access powerful analytics. Gone are the days of paper forms, photocopies, and print-outs. When you work using analog systems you can’t see valuable patterns in your HR data.
When you use a turnkey HR suite like Quentelle, you’ll be able to take a look at your HR’s analytics and metrics from a 50 thousand foot view, but also dive in as deeply and specifically as you want. With this flexible method of looking at your data, you can feel confident and empowered in your business decisions, and ultimately save time and money.
Stop guessing, and live in a world where you have easy access to data-driven insights.
When you use our accurate, robust employment verification tools, you’ll save time and reduce staffing costs by automating requests.
We put a strong focus on data privacy and security with every request. We use proactive threat screening and at-rest encryption for added safety measures on top of our FCRA compliance and SOC I & II certifications.
Tax Credits and Impacts
We have a partnership with Walton, a top provider when it comes to employment tax credits. Their data integrates seamlessly with our platform which gives you a simple, streamlined solution that screens all of your employees for Work Opportunity Tax Credits (WOTC).
We’ll leave no stone unturned when it comes to finding you any other tax credits you’ll qualify for, including federal, local, and state tax credits that your company may qualify for.
Not only is our process simple (you’ll use a proven, short questionnaire during your employee onboarding or hiring process), but we can also electronically file for any credits to ensure you make the deadlines to qualify.
Smart and Simple Redefined
We specialize in working with companies like yours to deliver the smart you want, and the simple you need. No matter which of our solutions you’ll need the most, you’ll find that we are one suite of proven solutions that work together seamlessly.
When you work using our platform, you’ll experience:
- One platform: A single, award-winning platform gives you a simple user experience.
- One contract: we use a simple, single service agreement.
- One data source: Goodby multiple payroll files, hello leveraging a single file for all services.
Quentelle: The Best in Unemployment Claims Management
When it comes to an all-in-one, turnkey HR platform, Quentell is the gold standard and the industry leader. We understand that no matter what size or type of business you are in, you’ll inevitably have to deal with unemployment claims.
And as you deal with those unemployment claims, you’ll also find that it can be tiresome and challenging to devote the necessary time and effort to them. Your HR team is having to your state’s specific requirements under tight deadlines, which takes up their valuable time and attention.
And if you’re like most companies, you’re doing your best to implement and maintain consistent separation policies to try to drive unemployment claims costs down.
Additionally, most companies don’t have a single, centralized method of unemployment claims correspondence, so it’s inevitable that some claims will slip through the cracks. And what does that mean? increased unemployment tax rates and inflated annual tax costs.
Through our trusted partnership with ValU NSN, our team here at Quentelle is able to provide the absolute best-in-class Unemployment Claims Management Program to companies of all sizes.
So what sets our comprehensive solution apart from the competition? Here are just a few key elements.
By using the State Information Data Exchange (SIDES), we’re able to electronically transfer all unemployment claims documents electronically. Since we can transmit any information quickly and securely, you’ll no longer be at the mercy of the deadlines and speed of the US postal service.
This flexibility grants our clients almost a full additional week to gather important documents and respond to claims. When you can gather the right information and deliver it with a quicker response time, you’ll not only transfer your data quickly and safely, but you’ll also be able to secure future appeals rights as well.
Simple Claims Handling in One Place
Our system will let you review each claim that comes in carefully. This allows you to determine if a claim is eligible– and if so– the amount and the benefit period of the claim as well.
Our system allows you to receive all claims directly from the state, and right within our platform. When you have your claims in one clearly organized location, you’ll also be equipped to dispute questionable claims more easily. And whether a claim is approved or you contest it, you can deliver responses to inquiries quickly to get ahead of state deadlines.
By handling your claims this way, your HR team can have a unified, organized approach to handling all unemployment claims, which means a more efficient workflow, and better use of their time.
Our system also easily allows your team to investigate separations so that you can get the best possible outcomes– which will reduce costs.
Professional Hearing Representation
If you do have a claim that results in a hearing, you won’t have to handle it on your own. When you’re partnered with Quentelle, any claims that result in a hearing will be administered by our highly-trained, dedicated staff.
Our staff averages 20 years of unemployment proceedings experience, which we use on your behalf to get the best possible outcomes. When we handle your hearings we’ll ensure that every witness is fully prepared before the hearing, every document and decision that pertains to the hearing is reviewed with a fine-tooth comb, and all appeals are submitted as warranted.
When we handle your unemployment claims hearings, you can be certain that we’ll get the absolute best outcome possible.
Detailed Education, Training, and Support
We’re proud that we don’t just offer a suite of industry-leading software tools– we offer our team to deliver details education, training, and support that is custom-tailored to each unique situation.
We believe in an interactive approach that will help the right members of your staff learn key information and skills in various areas that will help your business.
As we train your team, you’ll see what we’ve learned that the first line of defense when it comes to controlling (and potentially lowering) unemployment costs is having strong HR policies in place.
Our experts will educate your team on the following procedures and practices:
- Documenting unemployment claims properly and thoroughly
- Adhering to all state and federal compliance
- Acquiring strong win ratios using proven principles
- In-depth problem prevention to stop unemployment claims issues before they occur
- Performance management overall
Proven Solutions Powered By Advanced Technology
That’s our motto here at Quentelle. Because we truly believe in putting proven solutions powered by advanced technology at your fingertips.
When it comes to staying on the cutting edge of unemployment claims management services, we’ll deliver tomorrow’s technology today.
Let us show you why here at Quentelle, our motto is smart and simple. Schedule a demo now and let’s talk about how our state-of-the-art unemployment claims management technology can change the way you do business, and drive down costs.