Most employers routinely receive notices that former employees have applied for unemployment benefits. If the claimant left the company under circumstances that would entitle her to such benefits, many employers simply set aside the notice with no further thought.
Recent legislation, however, could make ignoring these notices a costly mistake.
As part of the Obama administration’s efforts to improve the integrity of unemployment insurance (UI), new legislation is now in effect to ensure that only persons entitled to UI benefits receive them. The Unemployment Insurance Integrity Act includes a provision that requires employers and their agents to give a timely and complete response to the state unemployment agency’s request for information regarding benefit claims. Failure to do so can result in the employer’s UI account being charged for benefits even if the claimant eventually is disqualified. If the state detects a pattern of unresponsiveness to requests for information about a claimant the employer could lose all rights to dispute unemployment claims. (In Texas, the pattern is defined as two failures to respond.)
Fortunately, compliance with the law is not difficult provided you take a few simple steps to make sure UI notices do not go unanswered. Here are a few suggestions.
- Designate a person or group of persons to be responsible for handling UI claim notices and information requests. Ideally, this person should have access to necessary personnel records and the authority to communicate with the unemployment agency on behalf of the company.
- Train your human resources staff in how to identify UI claims and direct them to the proper personnel. If your company has branch offices, be sure each is aware of how to recognize and forward UI-related notices.
- Implement a procedure for documenting claim handling, including information given to the unemployment agency and any communication with the former employee.
- If you use a payroll service or third party human resources administrator, be sure that these agents are aware of the deadlines and requirements for responding to UI claim notices.
- Revise your template for separation or settlement agreements to include a clear statement that you will respond to requests for information from UI agencies — including reasons for separation. Instruct managers to avoid verbal promises not to contest UI claims in conversations with departing employees.
If you receive a UI notice about a claimant with a separation or settlement agreement in which your company promised not to challenge an unemployment claim, consult your employment law attorney. Most states will not deem such an agreement as part of a pattern of noncompliance if it is a one-time, preexisting agreement. More than one such agreement, however, may trigger heightened scrutiny from regulators.
Further refinements of the law are likely with time, so keep your employment law attorney involved as you develop and implement new personnel policies. We’ll keep you posted as we learn of new legislation.