We Respectfully Decline
The Unemployment rate in our country has been on a slow and steady decline since the outrageous spike in unemployed and underemployed Americans suffering a decade ago.
At the time of the inauguration of President Barack Obama, the US was experiencing a devastating peak of Unemployed adults in the United States. Since the start of President Obama’s presidency, in 2009, there has been a definite decline from a national average from a staggering 10.3% unemployment rate to an impressive 4.3% unemployment rate reported mid last year.
Unfortunately, mid last year we began to yet again, experience a small rise in unemployed Americans, with a reported 6.6 million unemployed American Workers in June of 2018. African Americans, Hispanics, and Teenaged workers have been and continue to be among the highest percentage of workers affected by the unemployment rate and job shortages in the United States, with Caucasian and Asian workers being among the least affected. However, our current rates of unemployment are the lowest we have steadily experienced in over 50 years. Our country has not been this fully employed since 1969, except for a brief period in 1999 and 2000, when the Unemployment rate fell just below 4%.
So, let’s look at who’s doing it right and who’s still falling behind.
The following states have a current unemployment percentage of 3% and Lower: Iowa, Hawaii, New Hampshire, Idaho, North Dakota, Vermont, Minnesota, Nebraska, Virginia, South Dakota, Wisconsin
These states, however, are not doing as well as those listed above. With an unemployment rate of 4% and Higher: Connecticut, Michigan, New Jersey, Orgon, Wyoming, California, Pennsylvania, Illinois, Washington, Kentucky, Nevada, Ohio, Mississippi, New Mexico, Arizona, and Louisiana
Washington D.C. and Alaska are among the two states most suffering from the high Unemployment rates of 5.5% and 6.3%.
Keep It Colorful
It is imperative that companies do their part in creating an equal workforce, inclusive of under-represented demographics. Remember, there are hundreds of thousands of ready and willing workers with useful skills and drive from every race, gender, orientation, religion, and AGE. Your company’s cultural competencies in diversity and inclusion could even the playing field and produce invaluable turn around in our entire workforce and the overall economic health of our nation yet to come.
Less Isn’t Always More
You might think that less employee salaries your company is paying, the less monetary responsibility to your company. That might be so, if the reduction of your workforce is not being determined by layoffs, resignations, and terminations. While it might be in an employer’s best interest to cease its efforts to increase its current workforce, the opposite outcome can arise from actively decreasing your current staff.
For each employee leaving your company, there is a potential for monetary liability in the form of increased UI costs paid out to employees who are laid off, terminated, and often, who resign, depending on the qualifying factors associated with said resignations.
Looking Into Your FUTA
Federal Unemployment Tax Act imposes UI associated costs and taxes only onto Employers. Employees do not pay into UI taxes and associated costs. All UI Liabilities fall upon Employers. The only states in which Employees pay a very small contribution into the UI system is Alaska, New Jersey, and Pennsylvania.
The tax liability is calculated by applying the base wages, or the first $7000 paid to each employee, annually, by the FUTA tax rate, which is currently 6%. So, your company’s contribution will be 6% of each employee wages up to but not exceeding $7000 per employee in any base calendar year. Earnings over $7000 are not subject to this payout.
A Clearer Understanding
Unemployment Insurance is a federal program which protects the rights and interests of the working class in the United States. This program ensures that eligible workers who were released from their careers or job positions through no fault of their own, have temporary financial assistance while trying to secure subsequent employment yet again. The employee must meet State Law requirement and base period wage requirements to be eligible to collect Unemployment Insurance. Likewise, the employee MUST have been found to be out of work due to no cause of their own or unpreventable circumstances.
How Long Is Too Long?
Benefits in most states can be collected for up to 26 weeks and even longer, depending on the unemployment rate and circumstances present at the time of the continued claim. All 26 weeks of UI costs, the Employer is responsible for. Extended benefits normally range from an additional 7 to 13 weeks but can extend as far out as an additional 20 weeks! Each week of extended benefit payments are the same amount as those paid out during the initial duration of the initial claim.
Never Too Early To Start
It is important to look at UI Cost Management, not as something that becomes relevant at the time of separation for an employee from your company, but rather at an expense that is associated with the START of employment. So how do we keep these costs down? The best strategy for UI Cost Management is employee retention. Hiring candidates whose values, work ethic, interests and personalities align with your company’s vision. What are the applicants long term goals, specifically as they pertain to the longevity of your relationship?
So, What’s The Plan?
Strategize retention practices now! In the case of a revenue reduction, how will you retain employees, while attempting to regain revenue, rather than issuing layoffs and being subjected to increased UI Payoffs? When you layoff an employee, there are far more immediate financial repercussions than what you may have considered. Not to mention the ongoing financial responsibility for extended UI claim periods. Before laying off employees that you think you can no longer afford, consider the calculation of those severance packages, the risk of litigations, the hit to company morale, or a damaged relationship with employees who may one day be invited to return? Have you considered the cost of recruiting, hiring, and training new employees in their place?
Cut It Out
Have you identified all the areas in which you can cut Employer costs? Can your company discontinue raises, bonuses, petty cash expenditures, business travel, overtime, and office perks? No more coffee and flavored creamer, or Friday pizza parties, or free bottled water might seem like a huge inconvenience, but even talking to your staff about where the company is and its wish to keep everyone working might create a transparent culture where employees feel more valued and responsible for pulling together as a team to independently support the success of the company and its morale. Offering more unpaid days off, vacation days, or even unpaid sick days can also help cut costs and share the work load more evenly, rather than laying workers off because there is not enough full-time work to go around. Ask for volunteers to go to part time hours or if any employees would like to or need to take a temporary sabbatical while still feeling the safety of job security and the option to return. Likewise, offer shorter workdays or work weeks. Who doesn’t love the option of going home early? There are so many options available before you start cutting down your workforce and paying out heap sums of UI benefits and severance packages. Think every option through.
Weeding Out The Garden
One of the most beneficial cost reduction strategies for companies in threat of downsize is to complete an internal employee audit. Every successful business runs on a series of checks and balances. This normal business strategy isn’t only reserved for product vs revenue, but for employees vs optimum functionality and support. Review employee files, specifically inventorying which employees seem to have harder times adhering to company policies and procedures. Review attendance records and disciplinary files. Are any employees on 2nd, 3rd, or final warnings? Are any employees on probation or up for review? If downsizing is a must, can you start with Employees who are more liability than asset? Can you put more surveillance on those employees and be proactive in dismissing those employees who are not adhering to company standards? Those are the employees who will be less likely to file and less likely to be eligible to collect UI benefits, rather than upstanding employees who would otherwise be subject to a layoff, in case of downsizing.
What You Claimed Happened
Be forthcoming and detailed in your termination notices and if your claim responses. We cannot tell you how many claim responses we come across with limited explanations as to the reasons of separation. In most of those cases, Employer responses are generic “one-liners” like, “Employee was terminated for violation of the Employer’s Policy.” Or “The Employee was terminated for cause.” These statements do not win UI claims. Being a bit more detailed in your responses gives the adjudicator more information to make and educated determination, based on that law. Remember, that the claimant will be interviewed by and adjudicator and will most likely over-speak and over-explain, therefore, it is not in your best interest to under explain. Using more candid responses, such as, “The Employee was terminated for a violation of our company’s Code of Ethics when he/she reported false time card records in exchange for unearned wages.” This gives the adjudicator more insight to the facts that lead to the separation and may precipitate a deeper look into relieving the Employer of liabilities associated with UI claim costs.
Be timely in your response. Even though the response time may be a week or two, try to respond as soon as you have received the UI Claim. Do not wait until the last day to respond or send in your response. Remember that the people at the Unemployment Division likewise have huge workloads and are just trying to finish their work by the end of their deadlines. Please don’t make your deadlines match the UI Adjudicator. Be considerate of time and get them everything they need up front. Documentation, Policies, Records, as well as your more detailed but brief explanation of the employment history and reason for separation make the entire process run more smoothly and reduces the turn-around time for decisions, not to mention and increase in favorable decisions for the Employer and a reduced chance you will ever be responsible to pay out a single dime for that claim.