unemployment manage claim

Unemployment Insurance Claim Audits: Strategies For Employers

No matter what industry you’re in, if you have employees, it’s almost guaranteed that you’ll have to deal with unemployment claims at some point.

If you’ve ever dealt with an unemployment, claim you know that the process has many steps, takes up a lot of time, and can get complicated very quickly. You have to formally respond in very specific ways, and if you make a single mistake it can cost you large sums of money in unemployment costs.

There are definitely legitimate claims that are paid out each year, but sadly there are also many erroneous unemployment claims that are also paid out as well. There are various reasons for this, but it’s often because companies make mistakes or don’t know how to properly respond to a claim.

Have you been handling your unemployment insurance claims properly? Do you have a strategy in place when it comes to auditing your own process?

In this guide, we’ll give you a clearer, better understanding of how you should be handling your unemployment claims, and some sound strategies to protect your business moving forward.

Unemployment Claims Management

When you think of unemployment claims, you might not think of insurance right away. However, unemployment insurance (commonly abbreviated at UI), is a program that is handled through a joint effort between the state and federal government.

This program has been around since the Great Depression, but unemployment laws and regulations have had to shift and evolve as the years have passed. With the passing of The Social Security Act of 1935, all for-profit employers were required to provide as much as 26 weeks of unemployment benefits and compensation to qualifying employees.

There are state-run unemployment programs that have a pool of funds and distribute these benefits to those employees who are eligible. The funds come from collecting payroll tax from employers.

The employer payroll tax rate is unique to each business. It takes into account things like how many layoffs have previously occurred and other factors that have to do with the economy at a state and national level.

Basically, when an employee is laid off from working for a company, they might be eligible to collect unemployment benefits. It’s important to note that every employee who separates from a company has a right to claim unemployment, but not every claim automatically qualifies for unemployment insurance (UI) benefits.

Unemployment claims are handled at a state level – employees who have separated from your business submit their claim to the state in which they were employed. Once this claim is filed, it’s your responsibility to manage it – and this is the tough part for most businesses.

Your options are typically to accept the unemployment claim or contest it. Importantly, if you don’t reply, the state considers a failure to respond as “acceptance”.

You can see that handling unemployment claims in an organized, correct, and efficient manner has a direct effect on your company’s bottom line. Mismanaged claims can be a source of needlessly lost revenue.

The cost of each claim is unique because it’s based on how many weeks the former employee qualified to collect benefits, however, most claims cost (on average) between $4,000 and $10,000 dollars or more. As you can see, this can cause your unemployment costs to jump up quickly if you’re dealing with multiple claims.

Plus, when you accept unemployment claims, it will cause a rise in your company’s unemployment tax rate in the future.

There are many laws, procedural rules, guidelines, and best practices when it comes to handling your unemployment insurance claims and unemployment taxes.

Furthermore, consider that there might be times where these claims can pile up and create a backlog that can be difficult to reasonably manage. For example, if you’re forced into sizable layoffs due to outside factors (as we saw with the COVID-19 pandemic).

Many companies choose to handle their unemployment insurance claims using spreadsheets, paper files, and other dated methods that are not only tedious, but also ripe for human error. Additionally, if this data isn’t stored properly it can be lost or compromised and become essentially useless.

Other companies use more modern platforms and unemployment claims management services (such as Quentelle) to manage their unemployment insurance claims. This saves companies money and time, and is much more secure.

We’ll go into more detail later in this article about how to manage your unemployment claims, but for now, let’s walk through the steps of how unemployment claims work for businesses like yours.

How Unemployment Insurance Claims Work for Businesses

Use this guide to help your company navigate unemployment claims. It will walk you through what to expect step by step, and give you advice on how to best proceed.

Step 1: You’ll Get a Notification from the State

For many companies, the moment they begin to educate themselves on how to handle an unemployment claim is right after the moment they receive a notice that someone has made claim. That may be you and that’s okay – as long as you act quickly.

When an employee who is no longer with you files an unemployment claim, you’ll receive a formal notification from the state. When you receive the notification it will have all of the information that the employee who filed included when they filled out the application to receive benefits.

Note that if you see something inaccurate on the report at this phase, that doesn’t mean the state has accepted it as fact – it just means this is what the employee is claiming what happened.

In many cases, this notification will include forms (such as a questionnaire) that requests information from your company. The information you provide is what the state uses to decide if a former employee is eligible or not and if their claim will be accepted. (The combined information you provide is sometimes known as a separation report.)

There are some situations where the state’s unemployment commission will invite a representative from your company to take part in an unemployment hearing. These are typically scheduled as conference calls that allow the commissioner who is handling your case to gather more details and decide if a claim should be accepted or denied.

Step 2: The Unemployment Claim Needs to Be Verified

As we mentioned earlier, the state doesn’t immediately take the details that your former employee provided as facts. When you’re filling out your separation repot, you’ll have the opportunity to verify any details or provide any alternate details needed to bring clarity to the situation. Your goal here is to be fair, but also accurate.

When you’re going over your notice, the first thing you’ll want to do is make sure that this person was actually an employee of your company. It may sound basic, but formally verify that the person who is filing the unemployment claim was actually employed at your organization. Remember that people who work for you as contractors or staffing agencies don’t count in this verification – they can’t claim unemployment.

The next thing you’ll want to do is verify all of the factual details and data. Specifically, verify everything that isn’t open to interpretation or is subjective. This includes things like:

  • Date range of the person’s employment
  • Wages
  • Severance or vacation payouts
  • Any other factual details

Once you’ve verified the non-negotiable “data”, now it’s time to verify the claimant’s report of the situation. What did they say happened? And how  are they saying it happened? On the notification you received, the claimant provided their account of how and why they left the company.

If you disagree with anything that was claimed, remain professional and do your best to gather facts that prove your side of the story. Things like timecard reports, emails, incident reports, and other records can be key when supporting the details of how you claim things occurred.

Step 3: Decide If You Will Appeal

After you’ve read the details, if you feel that the claim is unjustly being filed, you have the opportunity to appeal it. This will typically result in a fact-finding hearing that will be conduced by your state’s unemployment commission.

In what instances should you appeal? Well, bear in mind that your employee may not be eligible for unemployment benefits for various reasons. Here some questions to ask yourself as you make the decision to appeal a claim or not:

Did this employee leave his or her job voluntarily? 

Did this person abandon their job? If so, they may not be eligible for unemployment benefits. There are some nuances here, however. For example, you can’t give your employee an ultimatum to “leave or be fired.” That’s considered a forced resignation. Additionally, if the employee was subjected to illegal acts (like discrimination) that isn’t treated as leaving voluntarily. There are some situations where an employee might resign because they’re relocating or due to a disability – depending on the circumstances that might be considered them having “quit with good cause.”

Did this employee show “willful misconduct” that caused them to lose their job?

There are certain unsavory behaviors that are considered as willful misconduct. Here are some examples of when this might be the case.

  • Being late or missing work excessively. Also called “excessive tardiness” and “excessive absenteeism”. Essentially, being late for work or missing work on a regular basis can be considered misconduct. Your company rules must have a clear attendance policy for this to make sense. Another key factor to this is that there can’t be good causes for the absences (such as disability and illness).
  • Violation of company rules. Every company has policies and rules. If you can prove that a policy formally exists, and that this employee knew about it and willfully disobeyed it, you might have a case for denial. The key is that they must have broken the rule intentionally while having knowledge of it.
  • Failure to follow instructions. If you can prove that you provided specific instructions to an employee and that they didn’t follow them, it could be considered misconduct. This won’t work if the unemployment commission deems that the employee’s decision was justified or if it deems that your instructions were “unreasonable”.
  • Poor professional behavior. Some behaviors are considered to be unprofessional whether they’re in your company policies or not. This includes behavior such as physical fighting, lying, stealing, sleeping on the job, using discriminatory or offensive language, being intoxicated at work, testing positive for illegal substances, etc. Even if these things aren’t in you company policy, many unemployment commissions will automatically deem them misconduct.

When should you accept a claim without an appeal?

As a general rule of thumb, if your employee either lost their job or had their work hours restricted, limited, or reduced for any reason that isn’t their fault, you should accept the claim. For example, if you laid someone off or cut their hours drastically because there was not enough work available for them, you generally shouldn’t appeal the claim unless there are other circumstances that would deem it fair and reasonable.

Step 4: Support Your Viewpoint with Evidence

If you have followed the above guidelines and you feel that the employee doesn’t have a fair right to receive unemployment benefits, you need to prove it with evidence. You must present any data, details, and facts that show the unemployment commission that the claim shouldn’t be accepted.

For this evidence to be sound and admissible, the best options are written documents or consensual recordings from company phones systems, security cameras, etc.

For written proof, things like signed disciplinary slips addressing attendance or policy violations, email correspondence or letters asking for a reduction of hours, and formal attendance records can help greatly.

When it comes to audio or video proof, any recordings of misconduct or knowingly breaking company policy, or recordings of customer complaints about an employee might work. In some cases, security camera footage of an employee engaging in misconduct might also help your case.

Copies of anything you believe will help give a better picture of your side of the occurrence needs to be provided to your case’s assigned unemployment officer. They will need to review this information prior to your unemployment hearing.

NOTE: If you do decide to appeal, your separation report, evidence, and confirmation you will be attending your hearing should be submitted to your state’s unemployment office.

Step 5: The Unemployment Hearing

The unemployment hearing will be a meeting between a representative from your company, the assigned unemployment officer, and former employee who filed the unemployment claim. Many states have a specific format for these meetings and there are rigorous guidelines of who can speak and when.

Your unemployment officer is in charge of the hearing so it’s best that whoever attends on behalf of your organization listens to them carefully and follows all instructions. Remember that there is a specific amount of time allotted for these hearings, so don’t be late and be ready.

You should also prepare for this hearing and show up with your own copies of your evidence. Look over the details of the unemployment claim and the data you have gathered just before the hearing so it is fresh in your mind.

It can be easy to get emotional during these hearings – especially if you believe your former employee to be misrepresenting the truth or being unfair. Remember that your former employee may be emotional as well – this is potential income of theirs on the line. Don’t fall into the trap of making personal attacks, arguing, or being unprofessional. State facts, and be fair, professional, and cordial.

If you’re honest, reasonable, and conduct yourself well, it won’t be lost on most unemployment officers. Remember that whoever is in the hearing is representing your entire company and should conduct themselves accordingly.

Step 6: What Happens After the Hearing?

Once your hearing is over, you’ll typically be given a timeline by your unemployment officer of when you should expect to hear the outcome of the case. Then, you wait until you receive the verdict of your hearing.

If you receive the outcome of the hearing and the unemployment agency has ruled in favor of your former employee who filed the claim, that isn’t the end of it. There will also be instructions on how you can formally appeal the decision.

In most cases, if the unemployment office of your state ends up granting your former employee benefits, they’ll let you know the reasons. It’s wise to review these reasons to help you decide if an appeal is worth your time, effort, and resources.

As you can see, the process of denying a claim is not a quick or an easy one, which is why so many organizations now opt to use other solutions. Let’s talk more about how unemployment claims management services can help you and your business.

Unemployment Claims Compliance and Record-Keeping

If it wasn’t challenging enough to have to manage unemployment claims yourself, there are two other layers – compliance and bookkeeping. You’ll see how proper record-keeping and adherence to the rules go hand in hand when it comes to having a sound unemployment claims process that works.

Unemployment Claims Bookkeeping

The proper keeping of records and details about all of your current and past employees is critical to protecting your business. We’re sorry to report that there are unemployment insurance benefits that are paid out in error – these are known as improper benefits.

Can you guess what the #1 cause for improper benefits being paid out is? If you guessed inaccurate information from an employer or claimant, you’re right. When it comes to the claimant submitting inaccurate information (whether maliciously or accidental) you don’t have any control over it. However, you do have control over the information you submit in response to claims filed against you.

When it comes to record-keeping, here’s one simple – but invaluable – piece of advice that can save your company untold sums of money: document everything.

If you have to submit information due to an unemployment claim dispute, having the proper details documented can be the single thing that causes the state unemployment agency to rule in your favor. This is a game changer when it comes to optimal unemployment claims management.

What should you document, specifically? Here are some guidelines:

Your company’s policies. Many companies don’t have all of their policies written out clearly in one document. It is important to put them together in an accessible and easy-to-understand way.

Any changes to your company’s policies. You may be surprised to learn that many companies have a set of written policies that don’t match the way they actually operate. This can cause issues when it comes to unemployment claims. Take the time to update your company policies so they reflect the way you truly operate.

Disciplinary actions taken against employees. It’s important to document any disciplinary action taken against your employees and have them sign it. Often called “write-ups”, these documented cases of an employee breaking company policies can go a long way in an unemployment dispute.

Job descriptions, offer letters, contracts, etc. Each employee should have a properly documented job description that clearly states what their primary duties are. Offer letters should also be used when hiring employees so their exact salary and position is clearly defined in writing.

Termination and resignation letters. If someone resigns, you should consider requiring a written notice from them that clearly states they are leaving (and if possible the reasons why, if any). You should also type your own termination letters when letting someone go. The letter should document the date they left and the reasons why.

Any other work-related statements or job changes. When possible, have anything pertaining to a change in an employee’s job responsibilities put in writing. For example, if an employee requests a reduction of hours, don’t accept this request verbally – instead require them to send an email or give you a letter. This is to protect yourself and give you proof if they file an unemployment claim because you reduced their hours.

Be Proactive with Your Record-Keeping

In addition to all of the above bookkeeping, there are also a handful of other clerical duties you can perform to get optimal results from any unemployment insurance claims.

For example, be sure to report every new person hired to the State Directory of New Hires, a required part of your hiring process. By reporting each person you hire accurately and quickly, it can help prevent the payment of ineligible unemployment claims once a person has returned to the workforce. (Remember that this date should reflect the date the person actually began working, not the date they were formally hired.)

Unemployment Claims Compliance

You share the responsibility with the state to ensure that the unemployment insurance program works effectively and functions as it should. Think of it like this: it’s the state’s job to be certain that each individual who files a claim is truly eligible for unemployment benefits, but it is your company’s job to provide them with as much information as possible to make the best decision.

To be compliant with the state as they attempt to administer unemployment benefits to deserving individuals, you must communicate quickly and accurately with them (and in the bookkeeping section below, we’ll talk about how proactive communication can help save you from improper paying of unemployment claims).

In the past, employers were only required to to respond to unemployment claims they were contesting or that they felt weren’t accurate. Things have changed with unemployment claims management, however, and now every employer is required to respond to all claims. If you fail to reply to all claims, you are not considered to be compliant with state regulations (and you can also cost your company unnecessary expenses in unemployment costs due to claims that shouldn’t have been paid).

While employers used to respond only to those unemployment claims that were considered inaccurate, they are now required to respond to all claims in order to remain com­pliant with state regulations and minimize financial exposure.

How to Be Proactive With Your Unemployment Claims Management compliance

1) Train your employees properly. It’s important that anyone in your organization who handles hiring or termination is aware of the unemployment system words, and what is required of them. If you educate your team, managing unemployment claims will be more efficient and successful.

2) Have all employees sign off on your company rules and regulations. Don’t just assume people know what is expected of them. Be certain to provide all employees with a written copy of your company’s regulations and rules, with a signed copy added to their personnel file as proof they agreed to abide by them.

3) Try not to terminate employees suddenly or without warning. Sometimes you’ll need to fire someone quickly due to a serious violation of your policies, but unless it’s absolutely necessary, we don’t reccommend doing this. If possible, issue a written warning that the employee signs so there is evidence that they are aware continued behavior like this will result in fair termination.

4) Stick to the SIDES. SIDES is an abbreviation for the State Information Data Exchange System, and is an electronic tool that was developed by state unemployment agencies and the U.S. Department of Labor. By using this tool you can react to unemployment insurance matters accurately, quickly, and securely.

5) Don’t go it alone. Many companies eventually realize that by processing unemployment claims themselves, they’re actually spending far too many hours and countless internal resources. Speaking frankly, the very best way to be proactive with your unemployment claims management compliance is to partner with an industry leader like Quentelle to handle it for you.

Remember, if your company is non-compliant you can suffer from payouts for erroneous claims, increases in your unemployment tax rates, and in some cases, even penalties and fines. Taking the time to be proactive, compliant, and keep great records is a strong strategy to overcome any unemployment claim challenges you may encounter.

Quentelle Is the Industry Leader in Unemployment Claims Management Services

When it comes to handling unemployment claims and unemployment cost management, there’s compliance, and then there’s optimization.

Unemployment claims management is a complex, time-consuming processv– which is why having a partner like Quentelle can help your company keep unemployment costs as low as possible. If all of this seems like a lot, that’s because it is. Managing unemployment claims can feel like an endless, time-draining treadmill with no end in sight.

Not only is it time-consuming and tedious, but when an organization handles their own unemployment insurance claims management, it’s often a very reactionary process. When you work with us here at Quentelle, we strive for proactive management solutions for your UI claims.

This includes things like acceptance and denial of claims, a consistent auditing and tracking of your UI claims history, and actively working to keep the overall number of unemployment insurance claims and benefit charges as low as possible.

Let us interact with the multiple state unemployment agencies so you don’t have to use your valuable in-house talent and resources. This gives your team the freedom to increase their productivity and focus on their core business functions.

Additionally, we’ll take the time to vigilantly perform tax rate verification to be sure that your state tax rate calculations are correct and that you meet all of the rigid timelines that are imposed by state agencies.

Another major benefit of using Quentelle and our partners for your unemployment claims management is that you’re reducing your chances of making a costly mistake. Don’t risk human error. You can rest assured that our team of experienced professionals are highly trained and specialize in handling these responsibilities.

You don’t have to try to navigate the maze of unemployment laws and procedures by yourself. Let our team of experienced professionals focus on unemployment cost control so you can focus on running your business.

What many companies don’t consider is that their in-house solution very typically results in frequent errors – which causes higher tax rates and increased unemployment costs.

If you’re ready to experience lower tax costs and a greater potential for tax savings, Quentelle is here to help.

Give us a call at 888-565-5515 or schedule a demo online, and we’ll show you why we’re the smart and simple way to handle all of your unemployment claims easily and optimally.

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