BEST PRACTICES: UNEMPLOYMENT CLAIMS

AND HEARINGS Tennessee Statewide Payroll Conference

August 2018

Unemployment Basics

Why Fight Unemployment Claims

What Claims to Fight

How to Fight Them Effectively

Unemployment Appeal Process

Proper Appeal Participation

August 2018

TODAY’S AGENDA

Unemployment tax rates are impacted by

both claims and tax management

TAX RATE

ASSIGNMENT

CLAIMS

MANAGEMENT

TAX

MANAGEMENT

CLAIM

APPEAL

HEARING

BENEFIT

CHARGE

VOLUNTARY

CONTRIBUTION

JOINT ACCOUNT

MERGER,

ACQUISITION,

REORGANIZATION

TAXES

%

The In’s And Out’s Of SUI

Benefit Payments Admin. Errors STATE

ACCOUNT

Payroll Taxes Voluntary Contributions

EMPLOYER CLAIMANT

The In’s And Out’s Of SUI

Benefit Payments Admin. Errors STATE

ACCOUNT

Payroll Taxes Voluntary

Contributions

EMPLOYER CLAIMANT

Taxes

$41.3B

Benefit

Payments

$33B

Improper

Payments

$3.7B

The In’s And Out’s Of SUI

Benefit Payments Admin. Errors STATE

ACCOUNT

Payroll Taxes Voluntary

Contributions

EMPLOYER CLAIMANT

Taxes

$41.3B

Benefit

Payments

$33B

Improper

Payments

$3.7B

REPLACEMENT COST FACTOR: $1.30

Top HR Trends/Initiatives*

Recru

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Cultu

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De

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Pe

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Pain Points

HR Departments struggle with

• PROCESS

• RESOURCES

• RESULTS

*Human Resources Today

Employer Claims Management Challenges

State of Tennessee Reference Chart

Rate Calculation Reserve State Maximum Tax Rate 10.00%

Wage Base $7,000 (Reduced from

$8,000) Penalty Tax Rate Not Applicable

Rate Issue Date 8/29 Average Weekly Benefit Amount

x Average Duration (weeks) $237.30 x 14.2 = $3,369.66

Joint Accounting No

Maximum Weekly Benefit

Amount x Maximum Duration

(weeks)

$275 x 26 = $7,150

Voluntary Contributions No Claim Response (Deadline) 7 Days

New Business Rate 2.70% 1st Level Appeal (Deadline) 15 Days

NBR (Duration) 3.5 Years Worksite State Yes

Minimum Tax Rate 0.01%

What Drives Unemployment?

Corporate

Restructuring

Economic

Conditions

Legislation

Organic

Expansion

Contraction

Influences on Protests and Win Rates

Non-Controllable

Legislative

Economic

Controllable

Claims Management Processes

Documentation

Timeliness

Protest Hearing Preparation

Representation

Why do we Protest Unemployment

Claims?

Cost Liability

Legal Compliance

Uphold Company

Policy

UI Integrity Act Sec. 252 of the Trade Adjustment Assistance Extension Act of 2011 (UI Integrity Act) directs all states to prohibit the relief of charges to an employer’s Unemployment Compensation account when the actions of the employer or the agent of the employer have led to improper payment of benefits due to the following conditions:

The employer or the employer’s agent failed to respond timely or adequately to the request made by the state agency for information relating to the claim for UC benefits that was subsequently overpaid

The employer or the employer’s agent has established a pattern of failure to respond timely or adequately to requests from the state agency relating to claims for UC benefits.

Federal Government mandated the UI Integrity Act be signed into law in all states by October 2013.

UI Integrity Act (continued)

• A response is considered untimely if it is mailed or transmitted electronically beyond the state imposed due date. Each state has a different time period in which a response is due but the average is approximately 10 days from the mail date.

Untimely Response

• A response is deemed inadequate if misrepresents or omits facts that if represented accurately or disclosed, would have been a basis for the state to disqualify the individual from receiving compensation.

Inadequate Response

• All states are required to track the response history of employers for timeliness and adequacy compliance. The federal government has left it to the discretion of the individual states to define the constitution of a pattern of repeated failure to respond to requests for separation information.

• 1st Occurrence

• 2 or 2% whichever is greater in the past year

• 5 or 5% whichever is greater in the past year

• 4 or more occasions in the past year

(Pattern of) Failure to Respond

Impact to Employers – The potential impact to employers for a single improper

unemployment claim is between $3,061- $13,416* (depending on your state)!

Despite UI Integrity, Unemployment Benefit Overpayments Remain a Problem

* Source: DOL, 2016 average cost = avg. weekly benefit payment x average length of claim x replacement cost multiple (exact cost is dependent on state-specific parameters.

https://oui.doleta.gov/unemploy/bam/2016/IPIA_2016_Benefit_Accuracy_Measurement_Annual_Report.pdf

$3.78 billion in improper benefits

13%

Improper Benefit Payments TOP 3 REASONS

• 35%+ are a result of work search errors

• Claimants collecting UI benefits and

wages for the same week

• Lack of timely and complete separation

information

Who Handles Unemployment?

SUI

Benefits

Payroll

HR Finance

Tax

Unemployment Claim Lifecycle Initial Claim

Receipt

Initial

Determination

Hearing

Notification

Hearing

Date

Hearing

Decision

Appeal Pursuit

& Decision

Best Practices: Mail Centralization

Address of record

Follow up and check often

Worksite State Communications California

Missouri

Kentucky

Oregon

Rhode Island

Tennessee

Pennsylvania

Memo / Poster

PROTECTING YOUR TAX POSITION

18

IT ALL STARTS WITH THE SEPARATION…

Separation Reasons: Non Protestable

EXAMPLES:

Job eliminated; Temporary assignment ended, Early Retirement Company Initiated; Probations EE- Time of Layoff

Inadequate performance (with no willful misconduct)

Did not meet company qualification criteria

Voluntary quit with good cause (Follow a spouse)

Absenteeism or tardiness with no willful, deliberate misconduct (out sick with doctor’s note)

Physical limitations

An employee is typically eligible to collect benefits ONLY when they are out of work through no fault of their own, and who meet all other requirements.

Separation Reasons: Protestable

EXAMPLES

Voluntary quit – resignation (without good cause) Early Retirement, Return to school, Relocation

Discharged for willful misconduct (Policy procedure violation/safety security violation)

Failure to adhere to work schedule / attendance / tardiness violations, Job abandonment, No call / No show

An employee is usually INELIGIBLE for benefits if/when they cause their own unemployment.

Choose your Separation Reason with Care!

Question 1: If the claimant didn’t resign, would he/she have been able to

continue employment?

Answer: If so, handle as voluntary quit

Answer: If not, handle as involuntary term/discharge

Question 2: Did claimant pursue all available alternatives prior to resigning?

Answer: If not, what alternatives were available (if pursued) could have persevered their employment (i.e. Leave of Absence, Request Transfers, Filed Complaint, etc)

Voluntary Separation Statute

Common statutory language requires that a

former employee/claimant show good cause

attributable to the employer for leaving work

voluntarily before any award of unemployment

compensation benefits is allowed.

Initial Claim: Burden of Proof is on the

Employee

Former employee/claimant must satisfy the following:

1) The reason for leaving was attributable to the employer

2) The employer was given a reasonable opportunity to address the

issue (s) alleged to be the employing unit’s fault

3) That he/she (claimant) took all reasonable steps, that they were

aware existed, to preserve their employment prior to effectuating

their separation

Involuntary Separation Statute

An employer who has discharged an employee

must establish that there was deliberate

misconduct and/or willful disregard of the

employer’s interest, in order to earn a denial of

unemployment compensation benefits.

MISCONDUCT DEFINED

Misconduct

An act of wanton or willful disregard

of the employer’s interest

A deliberate violation of the employer’s

rules

Intentional and substantial disregard of

employer’s interest

Negligence in such a degree or

recurrence as to manifest culpability,

wrongful intent, or evil design

Misconduct is Not… Mere Mistakes

Errors in judgment or in the exercise of discretion

Minor but casual or unintentional carelessness or negligence

Mere inefficiency

Unsatisfactory conduct

Failure to perform as a result of inability or incapacity

Inadvertence in isolated instances

Good faith errors in judgment

Best Practices: Favorable Decisions - Misconduct

Misconduct

The specific reason for termination

What happened that, had it not happened, the employee would still be employed?

Must be behavioral conduct

Awareness

Employer must have made employee aware of intolerable behavioral conduct

Job in Jeopardy

Employer must prove that employee was put on notice that conduct, if continued, could jeopardize his/her employment

Final Incident/Action Taken

When did behavioral misconduct reoccur?

How close to that time did termination take place?

Employer must prove they terminated employee ASAP

Best Practices: Documentation

29

Plus…

• Performance reviews

• Signed acknowledgment of receipt

of Employee Handbook or Union

Rule Book

• Relevant business records

• Exit interview form

Employment History

• First day worked and last day worked

• Position or job title at the time of

separation

• Job description

• Rate of pay at the time of separation

and prior rate of pay if there has been a

recent change in rate

Disciplinary History

• Signed or unsigned warnings,

suspensions, etc. by claimant, supervisor

and witnesses

Written Policies

• Company handbook

• Union rule book

• Training manual

• Copies of posted bulletins

regarding policies

Crucial records should be provided to hearing officer and claimant prior to hearing

Best Practices: Misconduct Supporting Documents Company

Policy

Signed

Acknowledgment Warnings

Incident

Reports

Additional

Documentation

Alcohol or Drugs

Company Property Y Y

Drug Test Results

Chain of Custody (Drug Administrator)

Rehab Program (Employee Explanation)

Absenteeism

Tardiness Y Y Y

Attendance Records

Call-In / Time Sheets

Dr. Note

Corrective Action

Insubordination

Personal Misconduct Y Y Y Y Witness Statements (Testimony)

Theft

Company Property Y Y

Signed/Written Admission

Video Surveillance

Police Report(s)

Complete List (missing items)

Fighting

Company Property Y Y Y Y

Witness Statements

Med Records (injuries)

Police Reports

Convictions

Employee

Harassment Y Y Y Y Witness Statements (Testimony)

Monetary Funds

Shortages/Overages Y Y Y

Merchandise Receipts

Cash Register Receipts

Company Property

Destruction Y Y Y

Written Admissions

Signed Witness Statements

Police Reports/Repair Estimates

Property Damages (pics)

Employee Record

Falsification Y Y Y

Falsified Records

Proof of Falsification

PROTECTING YOUR TAX POSITION

31

BEST PRACTICES: UNEMPLOYMENT HEARINGS

Protest Hearing: Employer has Burden of Proof

• First hand witness: Witnesses should be able to provide first hand

direct testimony as to the reasons for claimant’s separation. Testimony should be supported by documentation. Hearsay testimony is given little weight, if any.

• Letter of resignation: Preferably signed by former employee, which stated the specific reason (s) for leaving employment.

• Policies and procedures: What was available to the claimant which he/she could have utilized to preserve his/her employment?

Information via direct testimony and/or documentation to identify the specific reason(s) given by the former employee for leaving his/her employment

Best Practices: First Hand Witness(es):

Who knows the most about the separation?

Who was there?

Claimant’s co-worker or any other witnessing

individual to the terminating incident

Employees who discussed the final

incident/reason for resignation with the

claimant

Management/HR member(s) involved in the

claimant’s progressive disciplinary

action/grievance procedure

Claimant’s immediate supervisor or

management member who received the

resignation/discharged the claimant

Loss prevention personnel who conducted the investigation or witnessed the claimant’s

confession in the incident (i.e., theft, destruction of company property, shortages, etc.)

Medical technician or qualified personnel who

can fully explain drug/alcohol test results

associated with dismissal

Employees who created

documentation/business records associated

with the separation

Best Practices: Day of Hearing Witness Responsibilities

Be ready 15 mins prior Arrive 30 minutes prior

Have docs and know chronological

account of events

Be ready to testify with personal

knowledge

Be positive, keep to the issue, don’t

volunteer information

Listen and answer with direct and

concise specifics

When in doubt, ask your representative

or Hearing Officer for clarification

If you don’t know the answer, say so. No false answers!

Do not present testimony that was not

reviewed prior to the hearing

Best Practice: Company Standards

Detailed and complete unemployment claim responses UI Integrity Act

Remain educated on regulatory changes UWC /Advisor Newsletters / Legislative Announcements / State Websites

CCH (Online Compliance Tool)

Educate and Partner with employee population Conference Calls / Web Training / Corporate Conferences

Develop/Utilize metric reporting Trend identification and corrective action

Understand your Organization

Ask… Where is our unemployment cost highest?

What are our largest employment states?

Are we using discretion (i.e. low liability)?

Review current results (protest win%)

What are our most active separation reasons?

Identify

Prioritize

Act

Reporting Development & Utilization

Rate Projections

Avoidable Loss / Trend Analysis

Rehire Reporting

Effect of a denied claim on the UI tax rate

Effect of Denied Claims

Example: 6 Denied Claims

Company: Sample

(Estimated Liability Incurred $49,542)

2018

Tax Rate

Calculation

Tax Rate With

Denied Claims

Opening Balance $ 404,409 $ 404,409

Contributions 98,001 98,001

Benefit Charges (514,496) (464,954)

Ending Balance (12,086) 37,456

Current Taxable Payroll 10,600,000 10,600,000

Tax Rate 6.20% 5.60%

Tax Cost Effect 0.6% X $10.6 mil = $ 63,600 Cost

Questions & Thank You For additional questions, please contact:

Matt Kaufer

Vice President

Phone (516) 877-2860

Matthew.Kaufer@Equifax.com