As an employer, you’ve experienced the frustration of working with a government agency. You’ve paid federal, state, and local taxes. You’ve worked through the paperwork for worker’s compensation and unemployment claims. Some days, you think what could be worse?
How Does the Unemployment Insurance Claims Process Work?
Unemployment insurance was created as part of the Social Security Act of 1935, and it has remained fundamentally the same for the last 85 years. Although Congress created the program, its implementation was left to the individual states. As a result, each state has its own state unemployment office.
Filing a Claim
When people apply for unemployment, they must meet state-specific requirements before they can receive benefits such as:
- They are actively looking for work.
- They have completed a waiting period.
- They were laid off.
The claims process was originally an in-person, paper-based process. Although some states transformed their operations, most offices follow the same procedure set out in 1935. The only difference is the paper has been replaced with electronic copies.
Reviewing a Claim
The state is responsible for granting or denying an unemployment claim; however, they do inform the claimant’s most recent employer that a claim has been filed. The employer can contest the claim or let it stand.
- If the claim is legitimate, employers do not need to take further action. The state will issue a determination letter to employers and claimants, indicating the decision.
- Employers may contest the claim by responding to the notification letter within the specified timeframe. Failure to respond may result in a forfeiture of the right to contest.
Contesting a claim requires documentation such as employment start and end dates, compensation, and job title. Payroll records and personnel files may be required. Once the state has reviewed the information, it will issue a determination letter notifying the employer and claimant of the decision.
Appealing a Decision
Both the employer and claimant have the right to appeal a decision, but the appeal must be filed within a designated period of time. Appeals mean more documentation and additional filings.
Paying a Claim
As an employer, you begin paying for UI claims the moment you hire an employee. Employer-only taxes are collected at the state and federal level for each employee. The federal rate is fixed, but states determine an employer’s tax rate based on industry, experience, and the number of employees claiming benefits. The more claims, the higher the rate.
How Could the Unemployment Claims Process Work?
Transforming the claims process requires a return to the original objectives of the unemployment insurance program. Its purpose was to deliver financial assistance to the unemployed through prompt payment of benefits. In-person safeguards were used to reduce fraudulent claims. Today’s advanced technologies make it possible to expedite claim processing while protecting employers and UI agencies from system abuse.
Filing a Claim
Unemployment agencies use the State Information Data Exchange System (SIDES) to facilitate the electronic transfer of claims and associated documents. Instead of sending notification letters through snail mail, agencies can deliver filing documentation to the employer electronically. No time is lost in transit, giving the employer the maximum amount of time to prepare a response. The computer-to-computer interface not only expedites the initial filing, but it also reduces the number of data-entry errors that can occur.
Reviewing a Claim
With an automated claim processing solution, the digitized information can be evaluated using artificial intelligence and machine learning. By deploying rule-based technology, automated solutions can perform the following:
- Contest questionable claims
- Respond to inquiries within state-issued deadlines
- Verify claim-provided data
When discrepancies occur, the system can flag the claim for intervention.
For employers with employees in multiple jurisdictions, an automated solution can reduce processing errors. The system can ensure that:
- No deadlines are missed.
- All information is provided.
- All legal considerations have been addressed.
Without advanced technology, UI staff could be inundated with changes in state-specific requirements. Something as simple as an address change can derail the entire claim process.
Appealing a Decision
No matter who appeals a decision, employers will need to provide additional information. A digital solution ensures that all documentation from the notification letter to the appeal request is in one location, making it easy to access. Employees no longer have to search files, sort emails, or scour directories to find information.
Paying a Claim
Once a claim is approved, many companies consider the process complete and rarely, if ever, revisit a UI claim. Given the workload associated with the process, it’s no wonder that employees lack the time to check each approved claim. Yet, it is crucial that payments are monitored on an ongoing basis.
The state rate (SUTA) varies from one jurisdiction to another, as does the method for calculating what SUTA an employer owes. In most instances, the more an employer uses the system, the higher the tax rate. A recent analysis by the Bureau of Labor Statistics found that the SUTA rate can increase nearly 30% after a series of layoffs.
Transforming the Process
At its core, digital transformation is the ability to use technology to change how companies operate and how they add value for their customers, employees, and business partners. By deploying technology, organizations can become agile and better able to respond to business fluctuations. With a platform-based solution, an enterprise can pivot and continue to process UI claims without disruption.
Automated solutions make it easier for businesses to realize faster processing times, reduce errors, and lower tax rates. They also free employees to work on higher-value tasks that encourage collaboration and innovation. Technology facilitates the growth of a digital culture that can sustain a digital transformation. If you are looking for a UI claims management solution, contact us to schedule a demo.