Author: Anthony Paradiso
The unemployment insurance process is complicated for all parties involved. Although states have recently published detailed handbooks on how to proceed, employers are often unaware of the implications they’ll face if they don’t respond to an unemployment insurance (UI) claim.
When employees are fired or terminated for any reason, if they should apply for unemployment benefits, the employer must respond to the claim. A formal notice is mailed to the employer or its registered third party administrator when a claim for UI benefits is filed.
This report provides general information about the claim, including the reasons the claimant states they are no longer working. This report is the first opportunity for employers to respond and provide eligibility information. It’s necessary for the employer to respond in writing within 10 days of the mail date at the top of the UI notice about the claim.
Even if there’s a chance the ex-employee will ultimately be disqualified from receiving benefits, it’s essential that the employer still responds to the UI claim in a timely manner.
Here are three main reasons why an employer should be sure they respond to a UI claim:
- The employer’s state unemployment tax rate (or unemployment charges if the employee is a not for profit organization that has elected the benefit reimbursement option)
is directly affected by the number of ex-employees who have collected unemployment after leaving their business.
- Responding promptly to a UI claim may eventually discourage a lawsuit from happening. If there’s any chance that an employer gets hit with a discrimination or wrongful discharge lawsuit, the employer may increase their chances of winning the UI compensation hearing by responding to the claim.
- If a claim is not responded to timely, the employer may not a get a credit for any benefits that are ultimately determined to have not been properly paid.
Consequences of No Response
Not responding promptly to an unemployment insurance claim can directly affect an employer’s tax rate or benefit reimbursement charges..
All UI benefits are financed through federal and state unemployment taxes (or benefit reimbursement charges) which are paid by employers. Every state is different, but generally, they all base the employer’s tax rate or charges on the amount of benefits paid to former workers.
If a business fires or lays off workers only when absolutely necessary, uses the proper procedures to do it, and routinely contests unemployment benefit claims, they can lower their unemployment tax rate or charges.
On the contrary, if an employer ignores these claims, they may find their unemployment costs eating into their bottom line. If the employer does not respond or responds too late, the worker could automatically get UI benefits, in most states.