BEST PRACTICES: UNEMPLOYMENT CLAIMS AND HEARINGS. Tennessee Statewide Payroll Conference August 2018

Transcription

1 BEST PRACTICES: UNEMPLOYMENT CLAIMS AND HEARINGS Tennessee Statewide Payroll Conference August 2018

2 TODAY S AGENDA August 2018 Unemployment Basics Why Fight Unemployment Claims What Claims to Fight How to Fight Them Effectively Unemployment Appeal Process Proper Appeal Participation

3 Unemployment tax rates are impacted by both claims and tax management CLAIM % TAX RATE ASSIGNMENT APPEAL HEARING CLAIMS MANAGEMENT TAXES TAX MANAGEMENT VOLUNTARY CONTRIBUTION JOINT ACCOUNT BENEFIT CHARGE MERGER, ACQUISITION, REORGANIZATION

4 The In s And Out s Of SUI Payroll Taxes Voluntary Contributions STATE ACCOUNT Benefit Payments Admin. Errors EMPLOYER CLAIMANT

5 The In s And Out s Of SUI Payroll Taxes Voluntary Contributions STATE ACCOUNT Benefit Payments Admin. Errors EMPLOYER CLAIMANT Taxes $41.3B Improper Payments $3.7B Benefit Payments $33B

6 The In s And Out s Of SUI REPLACEMENT COST FACTOR: $1.30 Payroll Taxes Voluntary Contributions STATE ACCOUNT Benefit Payments Admin. Errors EMPLOYER CLAIMANT Taxes $41.3B Improper Payments $3.7B Benefit Payments $33B

7 Recruiting Culture Engagement Development People Analytics Employer Claims Management Challenges Top HR Trends/Initiatives* Pain Points HR Departments struggle with PROCESS RESOURCES RESULTS *Human Resources Today

8 State of Tennessee Reference Chart Rate Calculation Reserve State Maximum Tax Rate 10.00% Wage Base $7,000 (Reduced from $8,000) Penalty Tax Rate Not Applicable Rate Issue Date 8/29 Average Weekly Benefit Amount x Average Duration (weeks) $ x 14.2 = $3, Joint Accounting No Maximum Weekly Benefit Amount x Maximum Duration (weeks) $275 x 26 = $7,150 Voluntary Contributions No Claim Response (Deadline) 7 Days New Business Rate 2.70% 1 st Level Appeal (Deadline) 15 Days NBR (Duration) 3.5 Years Worksite State Yes Minimum Tax Rate 0.01%

9 What Drives Unemployment? Corporate Restructuring Economic Conditions Legislation Organic Expansion Contraction

10 Influences on Protests and Win Rates Non-Controllable Controllable Legislative Economic Claims Management Processes Documentation Timeliness Protest Hearing Preparation Representation

11 Why do we Protest Unemployment Claims? Cost Liability Legal Compliance Uphold Company Policy

12 UI Integrity Act Sec. 252 of the Trade Adjustment Assistance Extension Act of 2011 (UI Integrity Act) directs all states to prohibit the relief of charges to an employer s Unemployment Compensation account when the actions of the employer or the agent of the employer have led to improper payment of benefits due to the following conditions: The employer or the employer s agent failed to respond timely or adequately to the request made by the state agency for information relating to the claim for UC benefits that was subsequently overpaid The employer or the employer s agent has established a pattern of failure to respond timely or adequately to requests from the state agency relating to claims for UC benefits. Federal Government mandated the UI Integrity Act be signed into law in all states by October 2013.

13 UI Integrity Act (continued) Untimely Response A response is considered untimely if it is mailed or transmitted electronically beyond the state imposed due date. Each state has a different time period in which a response is due but the average is approximately 10 days from the mail date. Inadequate Response A response is deemed inadequate if misrepresents or omits facts that if represented accurately or disclosed, would have been a basis for the state to disqualify the individual from receiving compensation. (Pattern of) Failure to Respond All states are required to track the response history of employers for timeliness and adequacy compliance. The federal government has left it to the discretion of the individual states to define the constitution of a pattern of repeated failure to respond to requests for separation information. 1 st Occurrence 2 or 2% whichever is greater in the past year 5 or 5% whichever is greater in the past year 4 or more occasions in the past year

14 Despite UI Integrity, Unemployment Benefit Overpayments Remain a Problem Improper Benefit Payments TOP 3 REASONS 35%+ are a result of work search errors Claimants collecting UI benefits and wages for the same week Lack of timely and complete separation information 13% $3.78 billion in improper benefits Impact to Employers The potential impact to employers for a single improper unemployment claim is between $3,061- $13,416* (depending on your state)! * Source: DOL, 2016 average cost = avg. weekly benefit payment x average length of claim x replacement cost multiple (exact cost is dependent on state-specific parameters.

15 Who Handles Unemployment? Benefits Tax Payroll SUI Finance HR

16 Unemployment Claim Lifecycle Initial Claim Receipt Appeal Pursuit & Decision Initial Determination Hearing Decision Hearing Notification Hearing Date

17 Best Practices: Mail Centralization Address of record Follow up and check often Worksite State Communications California Missouri Kentucky Oregon Rhode Island Tennessee Pennsylvania Memo / Poster

18 IT ALL STARTS WITH THE SEPARATION PROTECTING YOUR TAX POSITION 18

19 Separation Reasons: Non Protestable An employee is typically eligible to collect benefits ONLY when they are out of work through no fault of their own, and who meet all other requirements. EXAMPLES: Job eliminated; Temporary assignment ended, Early Retirement Company Initiated; Probations EE- Time of Layoff Inadequate performance (with no willful misconduct) Did not meet company qualification criteria Voluntary quit with good cause (Follow a spouse) Absenteeism or tardiness with no willful, deliberate misconduct (out sick with doctor s note) Physical limitations

20 Separation Reasons: Protestable An employee is usually INELIGIBLE for benefits if/when they cause their own unemployment. EXAMPLES Voluntary quit resignation (without good cause) Early Retirement, Return to school, Relocation Discharged for willful misconduct (Policy procedure violation/safety security violation) Failure to adhere to work schedule / attendance / tardiness violations, Job abandonment, No call / No show

21 Choose your Separation Reason with Care! Question 1: If the claimant didn t resign, would he/she have been able to continue employment? Answer: If so, handle as voluntary quit Answer: If not, handle as involuntary term/discharge Question 2: Did claimant pursue all available alternatives prior to resigning? Answer: If not, what alternatives were available (if pursued) could have persevered their employment (i.e. Leave of Absence, Request Transfers, Filed Complaint, etc)

22 Voluntary Separation Statute Common statutory language requires that a former employee/claimant show good cause attributable to the employer for leaving work voluntarily before any award of unemployment compensation benefits is allowed.

23 Initial Claim: Burden of Proof is on the Employee Former employee/claimant must satisfy the following: 1) The reason for leaving was attributable to the employer 2) The employer was given a reasonable opportunity to address the issue (s) alleged to be the employing unit s fault 3) That he/she (claimant) took all reasonable steps, that they were aware existed, to preserve their employment prior to effectuating their separation

24 Involuntary Separation Statute An employer who has discharged an employee must establish that there was deliberate misconduct and/or willful disregard of the employer s interest, in order to earn a denial of unemployment compensation benefits.

25 MISCONDUCT DEFINED

26 Misconduct An act of wanton or willful disregard of the employer s interest A deliberate violation of the employer s rules Intentional and substantial disregard of employer s interest Negligence in such a degree or recurrence as to manifest culpability, wrongful intent, or evil design

27 Misconduct is Not Mere Mistakes Errors in judgment or in the exercise of discretion Minor but casual or unintentional carelessness or negligence Mere inefficiency Unsatisfactory conduct Failure to perform as a result of inability or incapacity Inadvertence in isolated instances Good faith errors in judgment

28 Best Practices: Favorable Decisions - Misconduct Misconduct The specific reason for termination What happened that, had it not happened, the employee would still be employed? Must be behavioral conduct Awareness Employer must have made employee aware of intolerable behavioral conduct Job in Jeopardy Employer must prove that employee was put on notice that conduct, if continued, could jeopardize his/her employment Final Incident/Action Taken When did behavioral misconduct reoccur? How close to that time did termination take place? Employer must prove they terminated employee ASAP

29 Best Practices: Documentation Employment History First day worked and last day worked Position or job title at the time of separation Job description Rate of pay at the time of separation and prior rate of pay if there has been a recent change in rate Disciplinary History Signed or unsigned warnings, suspensions, etc. by claimant, supervisor and witnesses Written Policies Company handbook Union rule book Training manual Copies of posted bulletins regarding policies Plus Performance reviews Signed acknowledgment of receipt of Employee Handbook or Union Rule Book Relevant business records Exit interview form Crucial records should be provided to hearing officer and claimant prior to hearing 29

30 Best Practices: Misconduct Supporting Documents Company Policy Signed Acknowledgment Warnings Incident Reports Additional Documentation Alcohol or Drugs Company Property Y Y Drug Test Results Chain of Custody (Drug Administrator) Rehab Program (Employee Explanation) Absenteeism Tardiness Insubordination Personal Misconduct Attendance Records Call-In / Time Sheets Y Y Y Dr. Note Corrective Action Y Y Y Y Witness Statements (Testimony) Theft Company Property Y Y Signed/Written Admission Video Surveillance Police Report(s) Complete List (missing items) Fighting Company Property Employee Harassment Monetary Funds Shortages/Overages Witness Statements Med Records (injuries) Y Y Y Y Police Reports Convictions Y Y Y Y Witness Statements (Testimony) Merchandise Receipts Y Y Y Cash Register Receipts Company Property Destruction Y Y Y Written Admissions Signed Witness Statements Police Reports/Repair Estimates Property Damages (pics) Employee Record Falsification Y Y Y Falsified Records Proof of Falsification

31 PROTECTING YOUR TAX POSITION BEST PRACTICES: UNEMPLOYMENT HEARINGS 31

32 Protest Hearing: Employer has Burden of Proof Information via direct testimony and/or documentation to identify the specific reason(s) given by the former employee for leaving his/her employment First hand witness: Witnesses should be able to provide first hand direct testimony as to the reasons for claimant s separation. Testimony should be supported by documentation. Hearsay testimony is given little weight, if any. Letter of resignation: Preferably signed by former employee, which stated the specific reason (s) for leaving employment. Policies and procedures: What was available to the claimant which he/she could have utilized to preserve his/her employment?

33 Who knows the most about the separation? Who was there? Best Practices: First Hand Witness(es): Claimant s immediate supervisor or management member who received the resignation/discharged the claimant Employees who created documentation/business records associated with the separation Management/HR member(s) involved in the claimant s progressive disciplinary action/grievance procedure Employees who discussed the final incident/reason for resignation with the claimant Medical technician or qualified personnel who can fully explain drug/alcohol test results associated with dismissal Claimant s co-worker or any other witnessing individual to the terminating incident Loss prevention personnel who conducted the investigation or witnessed the claimant s confession in the incident (i.e., theft, destruction of company property, shortages, etc.)

34 Best Practices: Day of Hearing Witness Responsibilities Be ready 15 mins prior Arrive 30 minutes prior Have docs and know chronological account of events Be ready to testify with personal knowledge Be positive, keep to the issue, don t volunteer information When in doubt, ask your representative or Hearing Officer for clarification Listen and answer with direct and concise specifics Do not present testimony that was not reviewed prior to the hearing If you don t know the answer, say so. No false answers!

35 Best Practice: Company Standards Detailed and complete unemployment claim responses UI Integrity Act Remain educated on regulatory changes UWC /Advisor Newsletters / Legislative Announcements / State Websites CCH (Online Compliance Tool) Educate and Partner with employee population Conference Calls / Web Training / Corporate Conferences Develop/Utilize metric reporting Trend identification and corrective action

36 Understand your Organization Identify Prioritize Act Ask Where is our unemployment cost highest? What are our largest employment states? Are we using discretion (i.e. low liability)? Review current results (protest win%) What are our most active separation reasons?

37 Reporting Development & Utilization Rate Projections Avoidable Loss / Trend Analysis Rehire Reporting Effect of a denied claim on the UI tax rate

38 Effect of Denied Claims Example: 6 Denied Claims Company: Sample (Estimated Liability Incurred $49,542) 2018 Tax Rate Calculation Tax Rate With Denied Claims Opening Balance $ 404,409 $ 404,409 Contributions 98,001 98,001 Benefit Charges (514,496) (464,954) Ending Balance (12,086) 37,456 Current Taxable Payroll 10,600,000 10,600,000 Tax Rate 6.20% 5.60% Tax Cost Effect 0.6% X $10.6 mil = $ 63,600 Cost

39 Questions & Thank You For additional questions, please contact: Matt Kaufer Vice President Phone (516)