In this post I want to outline a series of steps an employer can implement that may decrease its unemployment tax rate and taxes. The state unemployment tax rate is the only tax rate that an employer can effectively control. Because the tax rate is calculated over a three year rolling average, it may take a year or two to start realizing these savings. Here are the steps.
- Document employee problems and rule violations at the time those issues occur. Keep thorough, accurate records of these issues in the employee’s personal file. An even better record is one where the employee signs, at the time the performance is documented, that he has had an opportunity to review the documentation.
- Make solid hires and don’t over hire. Turnover can dramatically increase your unemployment tax rate. Consequently, make sure that you take all reasonable steps to ensure you are hiring good, qualified candidates for employment. Do background checks (but comply with the Fair Credit Reporting Act) and check references. Don’t hire more employees than you think you will need for the foreseeable future.
- Designate a specific person to receive and review unemployment claims. Ensure all employees responsible for receiving and distributing company mail know where to route correspondence from the Texas Workforce Commission. Ensure that when the designated person is away from work for vacation or leave of absence that another person is responsible for timely receiving and reviewing claims.
- Review every claim immediately. Ensure that all information on the claim form is correct. Errors in the employee’s stated compensation or termination date can result in the Texas Workforce Commission paying at incorrect rates or for improper periods.
- Timely respond to the TWC’s requests for information. This seems obvious, but the deadline for opposing unemployment benefit claims is jurisdictional and it is difficult to convince the Commission that good cause exists for a late response. Moreover, keep in mind that the deadline for the response runs from the date of mailing; not the date you receive the claim or determination.
- Timely appeal determinations that incorrectly award benefits. Some reasons for benefit ineligibility include: 1) misconduct connected with the work (this includes policy violations and intentional acts –not general poor performance); 2) voluntarily leaving work (i.e., a resignation that is not a constructive discharge or due to injury, illness or pregnancy); 3) aliens not authorized to work in the United States; 4) failure to apply for, accept or return to work; 5) leaving work pursuant to a labor dispute (i.e., union strike); 6) any periods where the employee is receiving wages in lieu of notice or is receiving workers’ compensation benefits for temporary or permanent disability.
- Attach evidence to support the reasons for benefit disqualification. For example, in a resignation case, attach the letter of resignation. In misconduct cases, attach copies of the policies the employee violated; evidence that the employee received notice of and/or training on those policies (e.g., handbook acknowledgments signed by the employee); and any copies of written warnings the employee received related to the ultimate reasons for termination.
- Appear at the telephone appeal hearing. Provide supporting evidence to the hearing officer several days prior to the hearing and bring witnesses that can testify and support the reasons that the employee should be disqualified from the receipt of benefits.
One final word of caution. If you think the former employee is likely to file a lawsuit or charge of discrimination against the company and the employee shows up at the appeal hearing with a lawyer (Remember: appeal hearings are recorded testimony under oath), the employer should seriously consider whether it might be prejudiced by moving forward with the hearing in the absence of counsel. Stated another way, consider whether it is worth winning an unemployment benefit hearing only to give the employee’s lawyer a preview of the company’s defenses that might be used in later litigation. Some plaintiff’s lawyers use unemployment benefit hearings as opportunities to conduct early free discovery and they know that most employers use nonlawyers to appear and attend these hearings.