Unemployment Insurance (UI) was created as part of the Social Security Act of 1935. Signed into law by FDR, the program was designed to serve as a social safety net, providing partial income replacement for involuntarily unemployed members of the labor force.
Employers are responsible for contributing to the trust funds that support these benefits, and payment into the funds is based in part on benefits paid out, it is important for employers to understand the basics of the program and their role in the unemployment claims process.
Throughout the lifecycle of a claim, navigating the complexities of UI can be challenging. Understanding the key steps and your responsibilities as an employer can reduce financial exposure and ensure your organization responds accurately and on time.
Unemployment Qualification
Unemployment compensation is a program designed to assist individuals who are out of work through no fault of their own. All claimants, in order to qualify for benefits, must meet strict requirements. While eligibility rules, prior earnings requirements, benefit amounts, and other details vary from state to state, key areas of qualification include:
- Being monetarily eligible based on their work history.
- Being separated from their employer for a qualifying reason.
- Being able and available for suitable work.
- Registering for work with the state agency and having documented proof that they are conducting a work search (in most states).
Lifecycle of a Claim
When a claim is filed by a former employee, the lifecycle of the claim begins, which determines the individual’s eligibility based on the separation reason from their most recent employer.
- Once filed, a claim is created, received by your unemployment claims manager, and entered into our database for tracking.
- Your unemployment claims manager checks your data file to obtain dates of employment, separation reason, and/or location information. Your unemployment claims manager will reach out to obtain additional separation information and documentation.
- Upon receipt of information, or on the claim’s state mandated deadline, your analyst submits the claim with all information and documentation available.
- The state may have follow up questions, or rebuttal requests, associated with your, or the claimant’s, initial response. If that occurs, your state request analyst will gather information related to these additional inquiries.
- An initial determination is received by your unemployment claims manager. If unfavorable, an inquiry is sent to see if an appeal is desired.
- Your decisions analyst can consult and offer advice about the chances of prevailing in an appeal and what information is needed to create the best case. If an appeal is desired, we will assist with filing the necessary paperwork with the state agency.
- Your hearings analyst forwards the hearing notice to your attention within 24 hours of receipt.
- Consultation is offered to ensure the process is understood and any witness(es) and documentation are prepared for the hearing.
- Documentation is submitted by your unemployment claims manager to both the Hearing Officer and claimant. Once complete, confirmations are sent to the witness(es) for proof, if needed, at the hearing. Contact information is also submitted/shared, when applicable.
- If the hearing determination is unfavorable, your unemployment claims manager can advise regarding further appeal and construct an argument for appeal to the Board or Commission.
What is the Base Period?
State agencies look at a claimant’s recent work history and earnings to find which employer(s) may be liable and for how much. Most states will use the base period to calculate potential unemployment liability for the employer. The base period is the first four of the last five full calendar quarters an individual has worked prior to filing for unemployment benefits. Each employer that paid wages to the claimant during that base period may be liable for a portion of the benefits.
That means an employee who worked for you over a year ago could still file a claim against your account, which could result in charges to your tax account. Since claims can be filed many months after termination, and management may have changed since that time, documentation is critical.
Base Period Claims
As an employer, it is important to understand how a former employee’s claim filing can financially impact your organization, and for how long.
While initial claims determine eligibility based on a claimant’s separation reason from their most recent employer, employers need to be aware that a claimant’s historical work with your organization can also result in an unemployment claim.
In order to determine claim liability, employers may receive a secondary unemployment claim, known as a base period claim. This type of claim does not determine eligibility for a claimant, but does determine whether or not your organization is liable for benefits associated with the claim filing.
About Us
For more than 40 years, 501(c) Services has been a leader in offering solutions for unemployment costs, claims management, and HR support to nonprofit organizations. Two of our most popular programs are the 501(c) Agencies Trust and 501(c) HR Services. We understand the importance of compliance and accuracy and are committed to providing our clients with customized plans that fit their needs.
Contact us today to see if your organization could benefit from our services.
Are you already working with us and need assistance with an HR or unemployment issue? Contact us here.
The information contained in this article is not a substitute for legal advice or counsel and has been pulled from multiple sources. Some information was provided by our friend, Darby Gibson, Client Marketing & Insights Specialist, at Thomas & Company.
(Images by: Alexkich and PVProductions)
