Studies show that employers’ unemployment costs have tripled over the last several years and continue to be on the rise. In addition to battling these ever-mounting costs, many companies overpay the required uninsurance premiums every year because they don’t completely understand the laws or the process.
Unemployment laws arose in the aftermath of the Great Depression in 1935 to provide temporary financial relief for people who found themselves out of work through no fault of their own. The official state government term associated with the distribution of these benefits became known as State Unemployment Insurance or SUI. Employees who voluntarily quit, were fired for misconduct or chose to retire would not be eligible for these benefits.
Every quarter, employers are required to pay a payroll tax into an unemployment insurance account managed by the State. When a former employee files a claim, the State simply takes payments designated for the employee from this account. The amount of a company’s uninsurance payment is typically determined by the laws set in the company’s state and a comparison of benefits versus taxes that a company normally pays in a period.
There is much left to the State’s interpretation because of this process and nothing official in place to call the State on the carpet for overcharging premiums unless the payments and claims are continually being analyzed. In fact, the State isn’t required to report any overcharging oversights unless their mistakes are in excess of 18 percent. That can prove to be a costly loophole for an organization. Reports have shown that even one improperly handled claim can cost a company thousands of dollars and place them in a higher tax bracket.
It pays for companies to consult with professionals who know what to look for when it comes to mishandled uninsurance claims and payments. A well-trained team of unemployment compensation consultants can perform the right audits, compile the right reports, research the right tax credits, ask the right questions and keep a keen, preventive eye on all future claims that can many times reduce employer unemployment taxes by more than 50 percent.
If you would like to learn more about Managing Unemployment Compensation, please feel free to contact Deluxe Payroll at 1-800-729-5910.