11.06.13 |
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Don’t Volunteer for a Higher Unemployment Tax Rate

shutterstock_87863866A U.S. Department of Labor Economic New Release  published on October 24, 2013 indicated that the total number of employment separations for August 2013 was 4.4 million, with 3.1 million of these being voluntary quits by the employee. Every employer will at one point or another experience a voluntary quit; the question is whether you are taking every possible precaution to help protect yourself from unnecessary benefit charges to your unemployment tax rate account.

Many people see a voluntary quit as the circumstance where an individual simply states, “I QUIT”. However, states may also take the position that employees voluntarily quit if, for example, they abandon their assignment by failing to report to work for a series of days or if they fail to maintain contact with their employer about their availability.

Unemployment Benefits to Employees Who Quit

Some states may require benefits be paid to individuals who voluntarily quit; however, in such cases the burden of proof for obtaining unemployment benefits will rest with the former employees to prove that they had good cause to quit, and in many cases, that their reason for quitting was directly attributable to the employer. In order to show good cause, employees typically need to prove the following:

They left for a compelling reason, such as a change* in hiring agreement, pay, hours/schedule, or location.

  1. There was no alternative* but to resign (e.g. reasons of harassment or safety concerns).
  2. They did everything possible* to rectify the situation prior to resigning.

Considering the prevalence of voluntary quits and the impact they can have on an employer if not properly managed, best practice is to gather and maintain documentation related to every voluntary quit, review each instance and determine the necessary  information to  provide to the state unemployment agency.

If you choose to protest a volunteer quit, most states will first expect you to provide a clear and concise explanation of the events that led up to the separation: this includes clear documentation to support your position. Documentation examples may include, without limitation, letters of resignation, employee statements, signed receipt showing the employees’ awareness of company policies, prior counseling and warnings and/or other related documents.

During any possible protest, a former employee may cite some type of dissatisfaction with their employment as their reason for quitting. This will require you to show that something was in place (resources, tools, personnel, etc) and available to the former employee that could help address that dissatisfaction, thus providing the employee with an alternative to quitting.

Voluntary Quit Treated as a Discharge

Not all voluntary quits are clear-cut. Some states may treat certain quits as a discharge for unemployment compensation/insurance purposes; for example, allowing an employee to resign in lieu of discharge will generally be viewed as a discharge. In those cases, the burden of proof may fall to you to prove that such discharge was the result of misconduct by the employee.

With over 50 million separations in the U.S. from August 2012 through August 2013, and voluntary quits steadily increasing, it is important to prepare for those claims because benefit charges to your unemployment tax account can be very costly.

Even though a former employee has the burden of proof to show good cause for his/her resignation, it is important to maintain complete documentation of any interaction related to the possible reason for separation. Submitting  all relevant documentation to the state agency with your response to a former employee’s claim is one of the best ways to assist in avoiding unwarranted unemployment claim liability.

*  Definition is subject to specific state guidelines and circumstances.

Learn more about unemployment compensation management solutions from ADP.


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