Understanding Your Unemployment Insurance Rate

Among the controllable costs for any practice is the unemployment insurance rate that you must pay for your employees. In most states, the percentage of wages that you have to pay in taxes is a direct result of the number of people you had to pay unemployment to in the past. Having a "plan of attack" from day one is a smart idea for any practice owner because once your rate increases, there really isn't anything you can do but wait for it to drop.

It's important to understand what laws are in place in your particular state to help you plan accordingly. For example, the rate in Arizona can go from .02 percent to 5.4 percent of the first $7,000 of wages. This additional cost can add up to thousands of dollars every year – money you can avoid spending by doing a few simple things.

1. Who gets unemployment?

In order to be eligible for unemployment, an employee must first meet state guidelines for income for a given time period; secondly they must have lost their job through no fault of their own. To control this, you as a business owner must document all terminations properly whether they are voluntary or involuntary.

2. What do can I do?

Voluntary terminations are the low-hanging fruit. When someone resigns, you must get a written resignation letter to put in their file. Taking this precaution may seem ridiculous, but I can't stress how common it is for an employee to resign for a new position only to submit an unemployment claim a few weeks later when it doesn't work out. It is essential to remember the burden of proof will always be on the employer.

In cases of job abandonment, it is important to send a certified letter stating their employment was voluntarily terminated because they did not show up to work for an extended period of time. In the letter, make sure you document all attempts to communicate with the employee about their absence.

Taking these two simple steps will help protect your practice when an employee leaves. Documentation for involuntary terminations should be part of your overall performance management strategy.

Adam McWethy, MA-HRIR, SPHR, is Human Resources Manager for Spear Education.