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March 30, 2010
Five Pitfalls That Increase Unemployment Tax Rates

In a 2010 BLR webinar entitled "Unemployment Taxes and Claims: How to Reduce Your Costs and Effectively Contest Claims," Ronald Adler, president and CEO of Laurdan Associates, Inc., listed five things employers should avoid in order to keep unemployment taxes low:

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  1. Forgetting to word termination letters properly. "When you must fire a worker," said Adler, "give the former employee a termination letter that spells out why he/she was terminated—worded properly to defend yourself later against unemployment claims."
  2. Failing to follow workplace policies to the letter. "Don’t play favorites with certain employees," Adler advised. "If your policies state that workers are subject to termination if they tally three absences in a quarter, for example, then enforce that policy when it’s violated."
  3. Not using written contractor agreements. "If you use independent contractors, document the relationship carefully. Make sure you have written contractor agreements signed by these workers, for example, so that they don’t try to file later for unemployment benefits charged against you."
  4. Not allowing disgruntled workers to resign voluntarily. "Don’t let your emotions get the best of you in these situations. If you have employees who want to leave voluntarily (and without a good reason, such as a discrimination complaint), give them every chance to resign voluntarily. Doing so disqualifies them from filing for unemployment benefits in most instances."
  5. Omitting exit interviews. Adler advised employers to conduct exit interviews whenever possible. "For example, consider giving departing employees a form asking them to confirm their contact information, etc., with a question that asks their reason for leaving. Sometimes, employees will give one answer when they are just about to leave, but a different answer days later when they decide to file for unemployment—and, in these situations, having this form filled out by the ex-employee may help you contest the claim."

Ronald Adler is president and CEO of Laurdan Associates, Inc. www.laurdan.com, a human resources management consulting firm specializing in unemployment insurance audits, consulting, research and expert witness testimony. Contact him at radler@laurdan.com.

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