As we outlined in a previous blog post Employer Basics: Unemployment Insurance in Illinois, an established employer must pay a percentage of each employee’s wages, up to an annual base of $12,690, into the State’s Unemployment Fund and that percentage can range from 0.55% to 7.75%. This difference can be significant, a multiple of more than 14 times, from a low of $71.28 to a high of $1,004.40 per employee.
So what determines the percentage of tax an employer must pay and how can he control it? The percentage an employer must pay is directly related to the number of employees claiming benefits in previous years. As a result, an employer can save a significant amount of money by putting into effect policies, procedures and practices that are designed to minimize unemployment claims (such policies, if done correctly also typically have the benefit of being the best defenses in a lawsuit as well).
Here are 10 Ways to Limit Your Risk:
1. Employee Manual. An employer should have an employee manual that applies a set of policies, practices and discipline measures to all employees. Any infraction of a policy should be dealt with according to the policy. An employer will need to show that the terminated employee knew the rules and was treated the same as everyone else. Work with your attorney to help draft a manual specific to your business.
2. Adequate Job Descriptions. Job descriptions create the foundation of what an employer expects his employee to do. Create simple, straightforward, reasonable and clear expectations and work behavior.
3. Document Each Violation. Anytime an employee violates a rule, policy, or directive by a supervisor, it should be documented in the employee’s file. These procedures should be laid out in the Employee Manual. An employee that has been repeatedly told that not to do something, but continues she may be committing “misconduct” under the Unemployment Insurance Act. Of course, there may be some instances of misconduct that, as spelled out in the Employee Manual, even a single infraction is cause for immediate termination.
4. Employee Acknowledgement. Whenever you give an employee a manual, a job description or a written warning and employer should document that it was given to the employee. The key is that the employee should acknowledge receiving it (or a witness noting the employee refused to sign). A paper trail is important to document an employee had actual knowledge of a rule or policy. Be clear that in signing the document the employee is acknowledging only that he received it and not necessarily agreeing with it. That will make an employee more agreeable to sign the acknowledgment.
5. 30 Working Days. Liability only attaches once the employee has been working for 30 working days (usually the equivalent 30 shifts – but this can vary). If an employee is not meeting your expectations, work with your attorney to determine the correct steps (following all of your established policies and procedures) to terminate the employee within 30 working days.
6. Transfer. If the 30 Working days has expired, consider transferring an employee into a new role rather than laying her off. An employee’s skill set may not match well with the current role, but there may be a better opportunity in another department.
7. Follow Up. Many organizations set out a 30, 60 or 90 day improvement plan with regular reviews but fail to actually follow through on it because of other commitments for performance or disciplinary inadequacies. If the conduct at issue is in the clear control of the employee (tardiness, behavior) consistent follow up can help defeat an unemployment claim.
8. Disability, Social Security or Worker’s Compensation. If an employee is receiving any of these three benefits, you may be able to avoid liability for an increase in unemployment insurance rates because in many cases the employee is not able to work which disqualifies them from unemployment compensation.
9. Document Resignations. When an employee resigns ensure there is a letter, email, or other document that confirms the employee’s decision to resign.
10. Respond to All Unemployment Claims. Like most states, Illinois’ unemployment system expects all parties, including the employer, to meet deadlines, attend hearings, and not delay the process. Many employees receive benefits simply because the small business owner never gave the hearing officer the right contact information.
If you have questions or need help with managing your unemployment claims, developing practices and policies for your business contact the experienced attorneys at Maduff & Maduff today.