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Best Practices for Controlling Unemployment Costs

Monday, November 01, 2021 3:59 PM | Denise Downing (Administrator)

Submitted by E3HR

We all know how an increasing SUTA rate can have a material impact on your pricing models. COVID has layered in additional complexities that could have a material impact on your business. Still, the basics have not changed and the need to block and tackle while maintain consistency is the best way to approach the topic.

Below are some helpful guidelines to follow as you navigate the process:

Best Practices for Controlling Unemployment Costs

Over the last 18 months Unemployment claims have reached all-time highs and are only now starting to decline. Employees throughout New Jersey and the country have been overwhelmed by this massive increase in unemployment claim volumes. With claims finally decreasing now is a good time to review best practices for staffing agencies to control unemployment costs and the overall SUTA rate..

Staffing agencies are uniquely affected by Unemployment Insurance (UI) Claims. The continual turnover of employees can open staffing agencies up to countless claims. Contesting baseless UI claims is the best way to keep your unemployment rates down. Proper recordkeeping, beginning with your new hire paperwork, is essential to disputing and winning unfounded UI claims. In addition to recordkeeping, separation reason and claimant eligibility are the key factors to consider when staffing agencies challenge UI claims. To fully understand how to challenge these claims, first we need to understand what the state is looking for when it comes it UI claims and staffing agencies.

Separation Reason

The state wants to know why the claimant is no longer working. Typically, the state classifies the reason for separation into 1 of 4 categories: lack of work, discharge, quit, and still employed. This article we will focus on the most common separation reason among staffing agencies, lack of work. The “lack of work” claim usually occurs when the claimant's last assignment has ended. It is important to note that it doesn’t matter why the claimants last assignment ended, but rather that “lack of work” separation reason does mean that they are still eligible for reassignment.

Eligibility

The next issue the state considers is eligibility. The claimant must be able, available and actively seeking and accepting all suitable work in order to draw UI benefits. This eligibility requirement is important. The claimant may have completed their assignment but not be actively looking for a new assignment.

Example of a typical “lack of work” UI claim:

Claimant completes their last assignment. They apply for unemployment. The claimant has met the separation reason: lack of work. The claimant may or may not be actively seeking work. This is where the eligibility factor and recordkeeping come into play. Most lack of work claims like this are lost because of little to no recordkeeping. Now, let’s discuss how to win these disputed lack of work claims.

Recordkeeping

Having the right paperwork in place from the start is crucial. When challenging a “lack of work” claim states will ask for evidence of your current policies and procedures. It is up to the employer to provide this evidence to the state. Without written documentation the state will often side with the claimant. .

If you don’t have similar policies in place, we encourage you to implement them immediately. The Failure to Maintain Contact Form can be added to your new hire paperwork and should be signed by every new hire going forward. This form was specifically designed to help staffing agencies control unemployment costs by winning more “lack of work” claims.

The FTMC form states that the employee will contact your agency immediately after their assignment has ended. Failure to do so may result in them being ineligible for unemployment benefits. With this FTMC form and policy in place New Jersey recognizes the FTMC as a voluntary quit and your UI account will not be charged.

States that don’t recognize the FTMC as a voluntary quit do recognize it as a secondary eligibility issue. This means the claimant will not be drawing unemployment benefits, reducing your liability and saving your unemployment account money.

UI Claims Cost Control Basics

● FTMC Form Signed by all New Hires

● Separation Reason: Lack of Work

● Eligibility: Actively Seeking Work?

● Recordkeeping: Signed FTMC, Work Refusal, Etc.

If we go back to the example of the “lack of work” UI claim: The employee who completed their assignment and applied for UI claims without first contacting your staffing agency would not receive UI benefits provided you have the FTMC documentation to provide the state.

A claimant would be eligible for benefits if they followed procedure by contacting your agency looking for more work at the end of their last assignment. If they refuse similar work, they would not be eligible for UI benefits. Again, recordkeeping is important, be sure complete a refusal of work form

Of course, there is a lot more to controlling unemployment costs that this “lack of work” snapshot. Unemployment rates differ by state, if you would like to learn more about controlling your unemployment costs, please reach out to the Compliance team at E3 HR Inc compliance@e3peo.com. We are happy to answer any unemployment questions you may have.


Contact NJSA

New Jersey Staffing Alliance
P. O. Box 518
Mount Laurel, NJ 08054
Tel: 973-283-0072
Fax: 856-727-9504

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