Understanding Your Unemployment Insurance Rate

Among the controllable costs for any practice is the unemployment insurance rate that you must pay for your employees. In most states, the percentage of wages that you have to pay in taxes is a direct result of the number of people you had to pay unemployment to in the past. Having a “plan of attack” from day one is a brilliant idea for any practice owner because once your rate increases, there really isn’t anything you can do but wait for it to drop.

It’s essential to understand what laws are in place in your particular state to help you plan accordingly. For example, the rate in Arizona can go from .02% to 5.4% of the first $7,000 of wages. This additional cost can amount to thousands of dollars every year — money you can save by doing a few simple things.

1. Who gets unemployment?

To be eligible for unemployment, an employee must first meet state guidelines for income for a given time period; secondly, they must have lost their job through no fault of their own. To control this, as a business owner, you must document all terminations properly, whether they are voluntary or involuntary.

2. What do can I do?

Voluntary terminations are the low-hanging fruit. When someone resigns, you must get a written resignation letter to put in their file. Taking this precaution may seem ridiculous, but I want to emphasize how common it is for an employee to resign for a new position only to submit an unemployment claim a few weeks later when the new position doesn’t work out. It is essential to remember that the burden of proof will always be on the employer.

In cases of job abandonment, it is essential to send a certified letter stating that their employment was voluntarily terminated because they failed to show up for work for an extended period of time. In the letter, make sure that you document all attempts to communicate with the employee regarding their absence.

Taking these two simple steps will help protect your practice when an employee leaves. Documentation for involuntary terminations should be part of your overall performance management strategy.