The Unemployment Road Map, Part 2: Control Unemployment Insurance Costs by Using Effective Hiring and Onboarding Practices

December 20, 2016
The Unemployment Road Map, Part 2: Control Unemployment Insurance Costs by Using Effective Hiring and Onboarding Practices

Even the best employment relationships can end and sometimes, when they do, they result in the former employee filing for unemployment benefits. If you have received an unemployment benefits claim and are not experienced with the process, you will likely have some questions. This blog series, The Unemployment Road Map, is a resource that TriNet offers to provide you with guidance on this journey.

While the states set unemployment insurance (UI) rates, employers can control costs by implementing best practices when it comes to hiring. Turnover, temporary staffing and layoffs can all increase your company’s UI costs. In part two of this series, we’ll discuss how following the correct hiring and onboarding procedures can improve your UI rates and help you keep more of your firm’s revenue.

Craft a well-written job description and offer letter

To make the best hiring decisions, start by doing a thorough job analysis. This includes a good understanding of the vital tasks associated with the position as well as the knowledge, skills and abilities required to accomplish those tasks. Being decisive and realistic about what skills are necessary versus those on the “nice to have” list will allow you to craft a well-written job description that clearly communicates your expectations. Your future employee will fully understand the position and its responsibilities. It will save recruiting time and ease the hiring process by limiting the applicant pool, so you can focus on candidates with the most to offer your organization.  

Clearly stated expectations at the outset provide valuable proof to the state that, even as an applicant, the employee knew what they were being hired to do and by applying for the position, they represented that they could perform. In some instances, an employer is asked to provide a job description to the state for an unemployment claim. It might also be helpful to submit the application and resume to further show the state that the applicant represented that they had the ability to do the work specified in the job description.

Once you have chosen the right candidate, you need to write the offer letter. The best offer letters include not only the position’s title, salary, hours and benefits, but also the job description. Organizational goals and values might also be included in the letter, ensuring an understanding of the culture, vision and mission of the company.

Alternatively, an employer could choose to keep the offer letter short and only outline the terms of employment. They could then present a copy of the job description on the employee’s first day along with the other new hire paperwork that must be signed. The duties included in the job description may evolve over time, but the letter should indicate responsibilities vital to the role at the time of acceptance. Should your candidate accept your offer, you must have them sign to indicate that they understand the job duties. This signed document will be useful if you need to terminate the employee for job performance issues. It is proof that the employee knew and understood the expectations of the position before they accepted it.

The importance of onboarding

Once an employee is hired, a general rule of thumb is to use the first 90 days of employment as an introductory period. Some would call this a probationary period, but use caution as there are several issues with this designation. A new employee’s onboarding time should be used to welcome and acclimate the new employee to the company, provide necessary training and evaluate suitability for the position. Conducting periodic reviews, documenting skill gaps and providing counseling sessions during this period (and throughout the employee’s tenure) can help avoid a negative outcome. Proper training usually helps avoid employee terminations and recording that the training was given will prove to the state that the employer did what they could to overcome any apparent skill gaps and to avoid termination. Low turnover positively influences UI tax rates.

Also, an employee handbook and its signed acknowledgement are important tools. The handbook ensures that employees are informed of policies, procedures, behavioral and attendance expectations in a structured and consistent manner. The acknowledgement form stating that the employee understands and has received a copy of the employee handbook is a key document used in contesting unemployment claims.

Bad hire – now what?

Despite due diligence, things can go awry and you may find yourself with a bad hire. Now you have three choices: terminate immediately, change the job to better suit the employee or invest in more training and education. What you do here should be based on the employee, the performance issues and the circumstances. If you decide to terminate, letting someone go early in their employment tenure will not affect their right to file an unemployment claim. But, it can reduce the chances that the employer’s UI account will be charged for any benefits paid or the liability amount if the account is charged.

The length of time the employee works is one of the main factors that determine how a UI claim affects an employer. The longer the employee works, the greater the chance the claim will fall into the base period (the first four of the last five completed quarters before an initial claim is filed). Additionally, since liability is proportional to the amount of wages reported, the more wages paid, the higher the liability.

It’s important to note that unemployment laws vary greatly from state to state.  In Illinois and Virginia, for example, an employer becomes liable for unemployment benefits after 30 working days. But certain states allow non-charging of the account below a certain amount of wages or a certain time. For example, in North Carolina your unemployment account is not charged if the employee is terminated within 100 days if you request it from the Division of Employment Security. Therefore, it is important to know the rules of your state.

A little forethought and planning goes a long way when it comes to hiring and unemployment. If you begin with the end in mind, it will have a positive effect on unemployment claims outcomes and consequently your UI costs.

This communication is for informational purposes only; it is not legal, tax, or accounting advice; and is not an offer to sell, buy, or procure insurance.

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