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How Can Your Business Control Expenses Associated with Unemployment Insurance?

costsWhile the Great Recession may have officially ended, many unemployed workers are still struggling to re-enter the workforce. According to a new report by the Center on Budget and Policy Priorities, the number of unemployed workers exceeds the number of available job openings. In July 2014, for example, 9.5 million workers were unemployed but there were only 4.7 million job openings1.

Employers attempting to manage unemployment insurance (UI) claims may be in for a difficult task. Changing conditions often make it a challenge to anticipate and control costs. Also, staff may lack the expertise they need to process and file claims correctly and may not be up to speed on the latest state and federal guidelines regarding UI.  The financial repercussions of unemployment claims can have a serious impact on your business – a worker collecting unemployment can push your business into a higher unemployment insurance tax bracket, potentially for several years to come.

So what steps can employers take to better manage this process? Here are a few ideas to consider2,3:

  • Be selective about hiring. If you hire good employees, hopefully you can help reduce the likelihood of having to terminate them and pay unemployment insurance. Distributing unemployment benefits, of course, depends on the specific situation, whether the employee left voluntarily or was fired, and other various circumstances.
  • Provide your employees with a handbook so they clearly understand policies and expectations. If they are terminated for not adhering to guidelines, they may be less likely to win a UI insurance claim by claiming that they didn’t know what the policy was.
  • To help ensure benefits accuracy, provide the right training tools and resources so your staff understands how to work with state agencies to process UI claims.
  • Review your statements to help ensure you’re not being overcharged for unemployment benefits.

In addition to these tips, businesses may want to consider working with a third-party administrator to help manage UI claims more efficiently and effectively.  An administrator can help streamline the process and provide employers with the tools and resources they need to help them better control expenses and mitigate risk.



 1Center on Budget and Policy Priorities – “Chart Book: The Legacy of the Great Recession”

2 Journal of State Taxation – “Unemployment Insurance Integrity: What Employers Need to Know”

3 Fox Small Business Center – “How to Keep Unemployment Insurance Costs Down”


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