Is Your Unemployment Tax Rate at Risk Under The New Unemployment Benefits Extension Act?
Last Thursday, March 10th, 2011, Governor Mark Dayton signed a bill authorizing the extension of unemployment benefits for a period of thirteen weeks. Although the bill was simply a technical acknowledgment of federal funds available for this purpose, the legislation is a strong reminder to employers of the value in determining unemployment insurance liability prior to terminating an employee.
In Minnesota, employees who voluntarily terminate employment or who are terminated for misconduct are ineligible for unemployment benefits, subject to very few exceptions. Unfortunately, for a variety of reasons, most employers choose to terminate an employee without the requisite documentation to support the denial of benefits, or in the alternative, fail to contest an application for unemployment benefits where there is strong support for denial. By failing to consider unemployment insurance liability as a factor in termination, or by permitting an award to an employee who is otherwise undeserving, employer minimize the effect a single claim may have against their account, mistakenly believing the claim has little effect on their bottom line.
The reality is that each and every claim made against an unemployment account can affect an employer's unemployment tax rate, as the taxable rate is based upon an experience rating. An experience rating is wholly determined by the value of the covered wages and the extent of benefits paid to former employees. With benefits available to former employees for an extended period of time, now up to eighty-six weeks, employers are watching their accounts, and their experience rating, take a substantial hit.
Understanding how to navigate Minnesota's unemployment system can be a difficult undertaking, but one that should be considered critical to securing strong business practices. Employers should take special effort to explore and consider the effect a termination may have on their unemployment tax rate, and contest those claims for benefits that are without merit.
In a recent seminar, I reviewed the methodology of unemployment insurance claims and provided practical steps employers should consider to protect their unemployment accounts. If you were unable to attend this seminar, and are interested in reviewing the material, please feel free to contact my assistant Nicole Foote at nfoote@eckberglammers.com or at 651-351-2128 to request a free copy of this presentation.
For clarity on the process, or for assistance in assessing or responding to a claim, please contact me directly at jnodes@eckberglammers.com or at (651) 351-2102. I am happy to answer any questions you may have about this letter or other employment related concerns.
