How outsourcing unemployment claims can help your business Featured

11:27am EDT September 1, 2011
How outsourcing unemployment claims can help your business

Unemployment compensation is complicated, which is one reason employers often end up spending more on benefits than they should.

Heather Vogus, vice president of unemployment services for CompManagement, Inc., says employers should consider outsourcing the management of their unemployment claims to an expert.

“By having an experienced partner help manage their claims and control costs, an employer is able to focus on what they do best — manage their business, service their clients, and produce their products,” Vogus says.

Smart Business learned more from Vogus about how employers can improve their handling of unemployment claims.

Why would an employer consider outsourcing management of its unemployment claims?

In one year, American businesses overpaid $17.5 billion in unemployment compensation with the average company paying out 11.2 percent more than they needed. By working with a company that has experience managing claims and controlling costs, the employer has the freedom to focus on the issues that keep its business running successfully.

What are the common separation issues the Ohio Department of Jobs & Family Services (ODJFS) uses to determine eligibility?

ODJFS determines eligibility based on the final incident whether that is lack of work, voluntary quit, or discharged from employment. If the final incident is lack of work, a claim will be allowed. If it is a voluntary quit, unemployment benefits can be contested and the burden of proof lies on the claimant. If it is a discharge from employment, benefits may also be contested but the burden of proof becomes the responsibility of the employer.

In a voluntary quit situation, what are examples of when benefits may be granted, and how can an employer avoid that situation?

In a voluntary quit situation, the claimant has to prove that he/she had no other alternative but to resign. Benefits are normally denied on quit issues.  However, benefits may be granted for the following reasons:

* Medical issues (if the claimant is able to work elsewhere)

* Change in terms of hire (i.e. hours or location change)

* Promises made and not kept

* Not allowed to work out notice, not paid

* Poor or unsafe working conditions

* Valid complaint to appropriate source without valid resolution

* Harassment

To avoid a voluntary quit situation, an employer should ask for a written resignation and retain that resignation in the employee’s file for three years. The employer should also pay the employee throughout the duration of his or her notice. If an employee refuses or ignores a recall from layoff, send a certified recall letter to the employee. ODJFS views this effort as a valid job offer and changes the status to quit, and benefits should be halted.

How can an employer defend against a discharge situation?

An employer has the responsibility of proving that the claimant was discharged for just cause. Benefits may be granted by ODJFS if there is no documentation provided by the employer, if the employer fails to follow its own policies and procedures, and if there is an illness on the part of the claimant and/or an immediate family member.

Some helpful tips for an employer to be able to defend a discharge include:

* Complete consistent and concise documentation at all times.

* Retain an acknowledgement of policy and procedures by the employee.

* Obtain witness statements when appropriate.

* Do not delay with termination after the final incident has occurred.

* Adhere to your own company policy.

* Provide the specific reason that the employee is being terminated.

* Keep all documentation for three years after the employment separation.

How can an employer be successful at an administrative hearing?

Preparation before the hearing is crucial. Be sure to coordinate any persons with firsthand knowledge and have them ready to appear at the hearing. In addition, be sure to submit all documentation prior to the hearing that you wish to present. Be mindful that information that has already been submitted must be reintroduced at the hearing. During the hearing be sure to listen closely to the questions asked, keep all answers simple and straightforward, and answer only what was asked of you.

What services should be expected by an outside vendor that would manage an employer’s unemployment compensation program?

There are five major components that a full-service unemployment administration company should offer. An employer that wishes to have a minimal time investment while reaching maximum cost effectiveness should look for a company that provides these services:

n Program review, recommendation and design — the effectiveness of any claims management program is directly linked to an employer’s personnel policies, procedures, rules, regulations and disciplinary procedures.

* Claims administration and reporting — scrutinize claim data for accuracy, completeness and eligibility; monitor all benefit charge statements to ensure minimum exposure.

* Hearing representation — coordination of the preparation of the case for an administrative hearing including submission of documentation and witness attendance.

* Tax management — review calculation of tax rates and offer recommendations on how rates can be reduced.

* Training and continuing education — programs that include the necessary elements of hiring, discipline, separation, employee relations and claims handling procedures.

Heather Vogus is the vice president of unemployment services for CompManagement, Inc. Reach her at (800) 825-6755, ext. 2440, or