States Buckle Down on Improper Benefit Charges

Every year, companies waste billions of dollars by paying improper Unemployment Insurance (UI) benefits to ineligible workers. Improper payment of benefits is often due to inaccurate or out-of-date information provided by either the employer or the applicant. Qualified UI workers are funded by a UI tax that employers are required to pay.

Since the Trade Adjustment Assistance Extension Act of 2011, states have been required to implement measures to prevent employers from avoiding improper benefit charges which would result in increased unemployment tax. In prior years, employers had more leniency and were often able to get the costs refunded to their company.

Beginning in 2014, states will also start scrutinizing information request avoidance.  Forty-three states along with the District of Columbia have enacted new regulations to encourage employers to comply.  It is crucial that employers are aware of the varying state regulations in an effort to keep unemployment tax rates down.  Upon receipt of information requests it is imperative employers respond timely, thoroughly and accurately.

Most states will use the terminology that the employer must establish a “pattern of noncompliance,” but do not indicate what represents a pattern.  Some states consider a pattern to be a fixed number of occurrences, some two or more non responses in a twelve month period and other may indicate a percentage.  Due to these variations, an employer must become knowledgeable of each states regulations or simply respond to information requests immediately and provide all the information requested.

As an employer, it is also important to report all new hires and rehires accurately and timely. Complying with the information requests and reporting requirements will help eliminate payment of Unemployment Insurance benefits to ineligible individuals. Employers who do not comply can face incorrect account charges for benefits paid to ineligible claimants, higher UI employer taxes and even potential fines and penalties.

Optimum Payroll Software makes federal and state compliance easy with more than 200 standard reports, automated processing features, and in house support. For more information on ways Optimum can streamline your process, watch a free demo or contact us today!

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Human Resources Jayne Masternak, Penn Union Corp

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