Home >> Insurance Best Practices Summary

State Unemployment Insurance Reduction

The basis for changes in your SUI is simple enough – lay off more employees, and your insurance charges go up. This is because the State must increase your SUI rate on a go-forward basis in order to cover the cost of increased unemployment payments that the State pays to your former employees. The key to avoiding a SUI rate increase is to avoid increasing the number of former employees obtaining unemployment payments, or to reduce the amount of payments they receive. Here are some ways to succeed with a state unemployment insurance reduction:

• Paperwork retention. Former employees may attempt to claim unemployment benefits even if they have no right to them under your State’s unemployment laws. If they file for unemployment, do not be surprised if the State’s claims adjudicator awards them with unemployment benefits. To avoid this, fully document the reasons for each employee separation, including copies of all warnings given. The employee should sign these warnings. When an employee leaves voluntarily, insist that the employee write and sign a resignation letter.
• Protest claims. When you receive notice from the State that an employee has filed for unemployment benefits, always file a protest if the company did not lay off the employee. Also, assign responsibility to someone who will assemble all documents needed for the protest, and who will represent the company before the claims adjudicator.
• Calculate cost. A manager may want to tell an employee that the company will not protest an unemployment claim. If so, prepare a calculation showing the cost to the company of allowing unemployment claims that the company could have successfully protested, and have the manager sign it.
• Examine statements. A State usually sends to the former employer an estimate of the cost of unemployment benefits to be paid to a former employee. Always review this statement to see if the employee work dates and pay levels are correct, since inaccuracies can result in excessive benefit payments.

Related Topics

Captive insurance companies
Insurance claims administration
Risk management policies
Risk management procedures
What is prepaid insurance?