Why Do Employers Contest UI Benefits?

[Jwd]

What is the name of your state (only U.S. law)? ca

Does an employer have anything to lose if a terminated employee recieves UI? Does it cost the employer anything?

If not, why would an employer go out of their way and spend the time to attend a UI appeal hearing?What is the name of your state (only U.S. law)?

 

[Zigner]

What is the name of your state (only U.S. law)? ca

Does an employer have anything to lose if a terminated employee recieves UI? Does it cost the employer anything?

If not, why would an employer go out of their way and spend the time to attend a UI appeal hearing?What is the name of your state (only U.S. law)?

Yes, it costs the employer money...

(Oh, and some employers might even do it to keep an unscrupulous former employee from cheating the system)

 

[CraigFL]

Wher do you think the money comes from? The employer gets charged a rate(%) of the payroll plus it gets raised if employees collect.

 

[Yertle8]

Most people think it is taxpayer funded.

 

[tranquility]

The account has a statistical calculation called a reserve. That amount is related to how much the business has to pay in UI.

 

[commentator]

I collected unemployment taxes from employers for many years. Unemployment is not taxpayer funded, except that it is set up by and funded by the state government in each state. NOT A DIME OF THE WORKER'S SALARY IS TAKEN OUT FOR UNEMPLOYMENT BENFITS IN ANY STATE IN THE UNION except for that part you pay in federal income tax which may trickle down to some small extent into the federal extensions now in force. (And nobody please chime in and tell me it's different in Rhode Island, or Hawaii, or somewhere. It's not.)

Every business with a certain number of employees must pay unemployment taxes on the first so many dollars of each employees' salary. They submit these taxes to the state, and each employer has a business account and is taxed at a certain rate. This rate is based on several factors, the reserve, the general unemployment rate of the state and nation over-all and something called the "experience rating" which means that whether you have a high tax rate is based partially on your past record of letting employees go who received benefits.

Seasonal businesses and cyclical businesses where people are going to receive benefits regularly as a part of the nature of the work pay astronomical tax rates. Employers who like the luxury of firing employees on whim, because THEY are having a bad day will pay a higher rate, because in order to fire someone and keep them from receiving benefits, the employer must present documentation that they had a good misconduct reason for letting the employee go.

Usually, if they had a good misconduct reason to terminate someone, the employer is not going to feel charitable toward this former employee. Even if it were scott free to the employee who is losing his/her job through no fault of his own (as the federal extensions are, which do not affect the state's employers rates and are not taken from the state's unemployment fund) an employer, or a state unemployment system is going to have a serious problem with someone receiving benefits who warmly and richly did deserve their termination due to laying out of work, persistent misconduct, or major misconduct such as stealing.

Some employers deeply resent having to pay unemployment taxes at all, and will violate the state and federal laws which prohibit employers from trying to keep their employees from filing for benefits when they are genuinely eligible. In this case, the appeals process protects the former employees.

Likewise, some construction companies who pay maximum rates will never contest anything, getting rid of problem employees by giving them a separation due to lack of work and never recalling them. These people can lose their benefits anyway if they do not cooperate with the job finding activities required of them by the state unemployment system.

So contesting a claim for unemployment insurance is a good business move, as it keeps the employer's tax rate from going up, and if they have terminated this employee for a good reason, they are acting in the company's best interest to follow through on the hearing process and make sure no one draws who is not legally entitled to do so.

Even when the employer does not contest the claim, there have been many cases where the person was denied benefits by the unemployment office if it was determined they had control over their reason for termination and it does not meet the requirement to draw.

 

[cbg]

Most people think it is taxpayer funded.

Most people are wrong, then. The money is paid by the employers on a quarterly basis on the basis of so much per payroll, and the more claims they've had, the higher the percent per payroll that they pay.

Edited to add: sorry, commentator, hadn't seen your post yet.

 

[commentator]

's okay, cbg, just don't tell me that it's different in Massachusetts.

One of my all time favorites was the young man who came in and gave me as his social security number something with the wrong number of digits.
When I mentioned that, he said, "It's right here" and proceeded to pull out his driver's license. When I humbly pointed out to him that this was his driver's license number, he loftily informed me, "But I'm from Arkansas! Don't you know that in Arkansas, we use our driver's license number on everything instead of our social security number?"

 

[cbg]

It's not different in MA. I promise.

PA, on the other hand....

 

[pattytx]

Yep, employees pay a portion in PA. .1% of subject wages with no wage limit. However, PA also has one of the highest UI benefit schedules in the U.S., especially when you consider the COL here vs. a lot of other states. For example, in the same year, the max in MD, right next door, was $359/week; the max in PA was $524 per week. The assumption being the employee contributions are the biggest reason for the disparity.

 

[Country Living]

A company in south Texas just pleaded guilty to fraud charges by under-counting their employees in an effort to reduce insurance rates. They were ordered to pay $200,000 in restitution.

Texas Mutual Announces $200K Verdict in Premium Fraud Case

 

[commentator]

Wow, pattytx, I am like, IN AWE here! Sure enough, PA state unemployment law section 301.4, Pennsylvania employers hold out a minute portion of the wages paid to each employee for unemployment taxes. They have the responsibility for doing it, keeping up with it, the state just tells them how much to get...And from consultation with my authorities, PA is the only state that actually does this.

After all these years of hearing, "I paid it in, so I should get to draw it out!" I find a state that really does have the employer withholding a little from each employee's pay--before the employee ever sees it, of course. But anyhow, you got me girl!

Though they have actually passed up Massachusetts in weekly benefit amount, I really don't think this tax is the reason they have a higher benefit amount. They've just found a snakey way to get the employees to pay for a little of the unemployment instead of the employers. Gee, this should go big in the southeast region if the employers ever get wind of it. We're on the road to criminalizing all benefit recipients anyhow!

That company in Texas was trying to screw over the private company that provided their worker's comp, not unemployment taxes, but boy, it's true and typical. Lots of employers seem to dash off into business without thinking about or trying to find out about the legitimate business taxes and such that they have to pay, or think that the system is really really dumb, and they can make up something and report it. Then they really have kittens when they are prosecuted.

 

[justalayman]

Yep, employees pay a portion in PA. .1% of subject wages with no wage limit. However, PA also has one of the highest UI benefit schedules in the U.S., especially when you consider the COL here vs. a lot of other states. For example, in the same year, the max in MD, right next door, was $359/week; the max in PA was $524 per week. The assumption being the employee contributions are the biggest reason for the disparity.

but even better, at least until this year;

any person in the US could file a claim for UI in MA as long as they worked in more than one state. None of the states worked in has to be MA.

I understand this has been changed this year but if it hasn;t please let me know as I will be visiting MA shortly to file my claim as well.

their max benefit amount is $628/wk

 

[commentator]

Ah yes, though it's actually wages in two or more states, none have to be the state you're filing from. Called a "combined wage claim." And hey, you could do it in Tennessee or Mississippi, too, if you wanted our awesome $230 or $275 a week maximum benefit! Pull in wages from any three states and draw TN benefits. Or MA benefits. Some choice, huh?

It seemed that all the pipeline workers, those ranging construction workers who installed the Alaska pipelines, those who travel all over the west doing oil rigs and such, know all about that. And since MA had the highest weekly benefit, they have for years had a system of getting their seasonal separation notice and relocating to MA for a couple of weeks before going home to their state.

TN and MS don't have such a problem with it, go figure, but I have heard that MA has lately stopped this practice by setting up a requirement that you have to chose to set up your claim from one of the states where you do have wages. So try to have some work in MA or PA if you want a better weekly amount. It is perfectly legal, the wages come out of the MA wage pool, you just have to know how to work the system, be willing to travel a bit and get an address.

 

[cbg]

Great, and make it even harder for those of us who actually live here to get through to someone on the phone or to get our claims filed because the system is so tied up.