As an employer, you want to do everything you can to control unemployment insurance costs. The following information will help you understand how the payment of unemployment insurance benefits affects your tax rate and what you can do to reduce employee turnover to lower costs.
Learn how benefits affect your tax rate
Employers pay unemployment insurance taxes into the state's unemployment insurance trust fund. When claimants file for unemployment insurance benefits, they are paid from this trust fund, charging the accounts of liable employers. Payment of benefits affects the tax rate for that employer in subsequent years.
Minimize contribution rates and benefit charges
Experience rated employers who maintain a stable payroll will generally have a lower unemployment insurance tax rate, and will pay fewer and lower benefit charges as reimbursing employers. Likewise, experience rated employers with high employee turnover or large fluctuations in their payroll will generally have a higher unemployment insurance tax rate and pay more in benefit charges as reimbursing employers. The following tips will help minimize your costs:
- File and pay taxes in a timely manner. Employers who are delinquent cannot make voluntary contributions to reduce tax rates, and unpaid contributions are not calculated in the formula for determining a tax rate.
- Monitor your trust fund reserve balance to ensure that the account does not go into deficit status and result in a substantial tax increase.
- Minimize temporary layoffs by reducing hours, scheduling vacation time, and allowing personal leave. Every separation has a potential to increase unemployment insurance rates or result in direct benefit charges.
- Diversify where possible to extend employment. Develop cooperative arrangements with other employers who could use workers during off seasons or periods of a layoff.
- Set up an off-season employee leasing option.
- Conduct employee training during off-seasons to improve and diversify their skills.
- Have a reasonably flexible leave-of-absence policy to help keep fully trained personnel.
- Whenever possible, consider re-hiring former satisfactory employees who are currently receiving unemployment compensation benefits.
- Combine jobs to avoid excessive part-time eligible claimants, as feasible.
- If possible, make voluntary contribution payments to increase your trust fund reserve balance and reduce the state unemployment insurance tax rate.
- Notify Job Service North Dakota of job refusals by individuals who you know are, or you believe to be, currently filing for unemployment benefits.
- Time your layoffs. Layoffs in September through December will not have an effect on your tax rate for a full year.
Retain employees with personnel policies
Consistently applying documented personnel policies and procedures is the first line of defense in controlling unemployment insurance costs. This includes Leave of Absence, Grievances/Complaint, Discipline/Discharge, Rules of Conduct and Employee Assistance Programs. Ensure both supervisors and employees are knowledgeable about policies and procedures.
The following personnel practices will help to reduce employee turnover:
- Hire the right person for the job. Screen job applicants by evaluating skills, training and experience.
- Check applicants’ references.
- Provide job orientation, furnish adequate training to the employee and make proper use of probationary periods.
- Provide employees with a handbook and obtain their acknowledgment of receipt of the handbook.
- Provide employees with regular performance evaluations covering their strengths and weaknesses, and provide performance counseling and commendation.
- Maintain good documentation and accurate records such as tardiness, absences, continued poor performance, etc. Give written warnings as appropriate prior to discharging an employee and keep copies and other supporting information to justify any action taken. It is a good practice to have the employee sign and be given a copy of the termination notice. If mailing the termination notice, send it certified, return receipt.
- Conduct exit interviews to understand why an employee is leaving and to consider changes to company policies or procedures that will assist in retaining employees and reducing costs. Be sure an employee understands the reason for separation, and if the employee is resigning, have him/her sign a statement explaining the reason for resigning.
Document separation information
How a separation report or a response to an unemployment insurance claim is worded can have a significant bearing on the claimant's eligibility for unemployment benefits.
When you document separation information, be as specific as possible. Avoid using broad or vague terminology. Information regarding the separation could be needed well after the initial date of separation. Here are some facts to be aware of when documenting separation information:
- Voluntary quit/personal reasons. What were the personal reasons - child care, divorce, medical, a family member, etc.?
- Voluntary quit/accepting other employment. With what company?
- Voluntary quit/dissatisfaction with a job. What was the individual dissatisfied with - pay, hours, duties? Had any of those areas recently changed? Did the employee express this dissatisfaction to any supervisory personnel?
- Voluntary quit/health reasons. What was the nature of health condition? Was it work related? Was it caused by a job condition?
- Voluntary quit/moving. Where is the person moving to? Why did the person move?
Discharging an employee requires facts. When documenting reasons for discharge, be specific. Usually, Job Service North Dakota will focus on the last incident, which caused the separation. Prior warnings and work record will also be considered.
- Discharge/poor or unsatisfactory performance. What was or wasn't the individual doing which caused his/her performances to be unsatisfactory?
- Discharge/violation of company policy. What was the policy? Was the employee aware of the policy? How was the employee aware of the policy? Had he or she been warned?
- Discharge/excessive absenteeism. Had he or she been warned? Did he or she call in to report absences?
- Discharge/insubordination. What were the actions or words that were considered insubordinate?
- Discharge/refusal to follow orders or instructions. What did the individual refuse to do? Was it a normal function of their position? Had he or she done it before?
- Discharge/fighting on the job. Did the individual throw the first blow? What were the circumstances of the fight? Were the police called? Had the individual been warned about fighting before? Were there witnesses to the fight?
- Discharge/alcohol-related violations or illegal drugs. Who witnessed such and was there any evidence? Were the police involved? Were there blood test results? Did individual refuse a blood test?
Train supervisory and management staff
Provide ongoing information to supervisory and management staff on the following topics to control unemployment insurance costs:
- How benefit amounts and tax rates are determined under the North Dakota Unemployment Compensation Law.
- The impact of a job attachment designation for claimants and the impact on employer individual tax rates and the trust fund.
- The process for setting unemployment insurance tax rates in North Dakota.
- Definition of terms for unemployment compensation purposes. Terminology used in separation may make a difference in whether a claim is paid or not.
- The unemployment insurance claims and appeals process.
- Appropriate responses at various stages of claims filing and the supervisor's role in that process.
- The importance of a “final incident" and releasing the employee as soon as possible after the employee has committed an act that requires termination.
- Conducting an investigation prior to decision to discharge.
- The role of the Human Resource Department in the unemployment insurance claims filing process.
Actively administer your unemployment tax account
The way in which you administer your state unemployment tax account can help control unemployment insurance costs. Do the following to remain active with your account:
- When/if you receive a “Notice of Claim for Unemployment Insurance Benefits” respond promptly, accurately and in detail with any appropriate accompanying documentation. Be careful to avoid penalties for giving incorrect information. If you have questions, call the Unemployment Insurance Claims Center at 701-328-4995.
- File timely appeals to initial decisions when there is a basis for the appeal. Provide the reason for the appeal, be prepared to participate in the appeal hearing, and present pertinent documentation and testimony.
- Promptly provide answers to telephone inquiries from Job Service North Dakota.
- Participate in appeals hearings and be prepared:
- Furnish documentation.
- Review all facts, including the determination prior to the hearing.
- Ask to review the claimant's statement prior to the hearing.
- Discuss the case with your witnesses before the hearing. Know what points you want to make in advance and plan how you can best get these points across.
- Prepare a list of questions to ask the claimant.
- If the claim involves difficult or complex issues, you may want to seek legal counsel.
- Include witnesses with firsthand knowledge of pertinent facts when attending a telephone or in-person hearing.
- Review quarterly “Statements of Benefits Paid” sent to you by Job Service North Dakota. These notices outline benefit payments made to your former workers and any resulting charges to your account. You may find people are working for you or another employer while drawing unemployment benefits.
- Review options for experience rate assumption when acquiring a business or expanding a business.
- Use electronic filing options to submit quarterly unemployment insurance tax reports.
- Provide early notification to Job Service North Dakota when planning to lay off staff. Individuals may be placed in other temporary or full time employment prior to drawing unemployment insurance benefits.
- Appeal erroneous charges to your account and adverse decisions which you do not agree with within time limits established by law or administrative rule.
- Actively participate in the state and federal legislative process to ensure employer concerns are represented.