A common misconception around unemployment insurance is that it’s a right for all terminated employees, and just a natural cost of business. Because of this, companies overpay millions each year because they don’t follow up with claims or miss important deadlines. Beyond just overpaying claims, the cost to your company increases through tax rates.
Increasing Tax Rates
Unemployment insurance is paid primarily through a payroll tax (in for-profit companies) that is based on a tax rate. This money is collected and stored to be given out when a claim is filed. The specific taxes vary based on a number of factors, including the frequency and amount of your UI payments.
The more UI claims you pay, the higher your tax rates will go to make sure all employees are covered based, on the current trend. It’s not a year-by-year process, either, so assuming one year full of a large of number of claims won’t have a major effect is incorrect. Due to tax cycles, the rates go by every three-to-four years, meaning one bad year can cost you more money for several years to come.
If you’re a smaller business, these tax claims will likely hit you harder, but the tax rate can hurt a business of any size.
Lowering Your Rates
While you can’t control every factor related to taxes, you can help out when it comes to the number of claims you pay. Just because you let an employee go doesn’t mean they automatically qualify for UI.
In fact, you’re only required to pay if the employee was let go at no fault of their own, for example in a layoff situation. The unemployment fund is meant to help those suddenly without income until they find a replacement. By not paying attention to the law, you could be paying for claims involving employees who were fired based on poor performance or other correctable actions.
Monitor Your Claims
While it all seems easy enough to say you should pay more attention, the reality is usually much more complex. It takes time to keep with these claims and the varying deadlines, and you might not have the personnel resources or time to train to make sure they’re adequately handled. As a result, you’re likely paying for claims you don’t have to, and seeing your tax rates increase as a result.
Unemployment Tracker is a software designed to make your life easier and save you money. There are different levels available to give you the exact level of control you want, that comes with a customizable interface so you can organize it in a way that makes sense to your business.
Stop Spending Pointless Money Today
With alerts and reports designed to keep you in the loop without wasting time, you can trust that Unemployment Tracker will save you money and keep you from overpaying UI claims. Interested? Request a live demo today and see how Unemployment Tracker can work for you.