In 2021 Can You Afford to NOT Manage Your Unemployment Claims?

In 2021 Can You Afford to NOT Manage Your Unemployment Claims? Featured Image
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by Lynn Connor, Business Development Manager, COATS Staffing Software

If you operate a staffing company, you are likely aware that one of your largest expenses is the payment and handling of unemployment claims. But did you know, forgotten claims could cost your company as much as $4,500 a year, per claim?

If you fail to respond to and address these claims on time, they fall through the cracks and you won’t be able to contest them.

Nationally, over 3 billion dollars has been attributed to overpayments on unemployment benefits.  Thirteen percent of all unemployment insurance charges to an employer’s reserve account are overpaid.

There’s a good reason this happens. It takes a considerable amount of time and experience to manage unemployment claims applied for by your employees. And, if you are in the staffing industry, this job is now tenfold, due to the sheer number of temporary employees agencies serve. Then, combine being a staffing agency owner and the pandemic where unemployment claims rose to historic levels.

Move loss centers to profit

If you don’t have a Risk Control Manager, Loss Prevention Coordinator, Unemployment Claims Manager or FTE who can handle unemployment, worker’s compensation and client collections for your staffing firm, you are missing the opportunity to move loss centers into profit – or at a minimum, into expenses that are monitored and thus controlled.

Let’s start with and focus on the unemployment portion of probable loss centers within a staffing agency.

How does unemployment insurance work exactly, in a nutshell?

  • It’s paid by a tax levied on employers by their state and by the Federal Unemployment Tax Act (FUTA) which is 6% of the first $7K earned by an employee.
  • States can take a loan from the federal treasury if their reserves are depleted but need to repay that amount within 3 years or taxes are increased until the debt is paid.
  • States determine unemployment insurance rules such as the amount paid, how long an employee needs to work before being able to file, if there is a minimum total wage amount requirement prior to layoff for filing eligibility, how claims are processed and reimbursed if needed.
  • Employees who voluntarily quit, students, self-employed workers, undocumented and gig workers are not eligible to receive benefits.

The pandemic and unemployment

Since March 2020, The CARES Act, the Pandemic Unemployment Assistance Program and the Families First Coronavirus Response Act have all provided different types of assistance, including unemployment, to individuals and businesses affected by the pandemic.

The U.S. Department of Labor website states, “On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (FFCRA), which provided additional flexibility for state unemployment insurance agencies and additional administrative funding to respond to the COVID-19 pandemic. The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27. It expands states’ ability to provide unemployment insurance for many workers impacted by the COVID-19 pandemic, including for workers who are not ordinarily eligible for unemployment benefits.”  Under the PUA program which is part of the CARES Act, individuals who do not qualify for regular unemployment compensation and are unable to continue working as a result of COVID-19, such as self-employed workers, independent contractors, and gig workers, are eligible for PUA benefits.

Unemployment as of April 2021

The most recent labor market data according to Lucia Mutikani of Reuters, shared the unemployment rate rose to 6.1% in April from 6.0% in March as 430,000 people entered the labor force.

Temporary help services dropped over 111,000 jobs, manufacturing fell by 18,000, automotive manufacturing dropped 27,000 from a semiconductor chip shortage, while transportation, warehousing and couriers fell by 77K and retail lost over 15K jobs.  Thus, “the road to full employment may be a bit longer than we all thought,” said Scott Anderson, chief economist at Bank of the West in San Francisco.

Software to manage your unemployment claims

Based on what the staffing industry does: employs thousands of people on short, long-term and temp-to-hire assignments, the need to monitor those employees who are eligible for unemployment benefits will always be necessary. It’s absolutely essential for staffing companies to know which of their temporary employees is eligible for benefits, has filed, has a legitimate claim, who is available and able to work, who has been offered an assignment and who has not, who has rejected assignments, not shown to an accepted assignment or simply can’t be reached.

Because of this, COATS Staffing Software has partnered with Unemployment Tracker to assist our clients in the management of Unemployment claims. Unemployment Tracker integrates with COATS allowing the user to set up automatic file exports via SFTP with Unemployment Tracker regarding employee information, job order assignments, contact notes and pay history.

According to Joel Naroff, a chief economist At Naroff Economics, “The only thing keeping job gains down is supply, not demand.”  This was addressed today as President Joe Biden defended his expansion of unemployment benefits from March’s Covid-19 Relief Bill, sharing that his administration will remind States that unemployed Americans must take an offered job or risk losing benefits.  And, those currently receiving unemployment benefits should be demonstrating their actively seeking work.  “If you’re receiving unemployment benefits and you’re offered a suitable job, you can’t refuse that job and just keep getting unemployment benefits,” Biden said.

It seems unemployment claims are going to be at a heightened level for some time to come. Trying to handle all of these unemployment claims and respond to them within the allotted time can put an enormous amount of stress on your HR department, which in the staffing industry, is literally the majority of your staff members.

Have that someone who “knows all things unemployment”

Staffing companies who “have that someone who knows all things unemployment” can license Unemployment Tracker Software to manage unemployment claims internally. Our software solution is connected with SIDES which eases the process of receiving and responding to claims as well as tracks charges and credits down to the individual claim to catch those over-charges no one really knows about.

Having a complete unemployment cost management program is time-consuming, costly and takes someone who really understands the complete unemployment claims process, and in your state.

Responding to each claim is only one requirement in handling an unemployment claim.  You still need to:

  • Track all the protests to conclusion
  • Respond to all additional requests for information
  • Calculate wage audits
  • Track all charges and credits and audit charges to each individual claim to ensure you are not overcharged for legitimate claims
  • Protest all overcharges and track to ensure you are fully credited back

Additionally, each state’s unemployment laws are a little different. Outsourcing your unemployment claims to Unemployment Tracker’s staff of claims processors who “know all things unemployment” will ensure you are controlling your unemployment cost-effectively.

The Unemployment Tracker tool partnered with COATS Staffing Software, really is an easy-to-use and cost-effective solution for managing your staffing agency.  Reduce the labor needed to manage your UI program up to 50%, increase the credits to your state UI account up to 35% and significantly reduce errors and missed deadlines.

Contact COATS Staffing Software Today for Unemployment Tracking Made Easy

Outsourcing your claims to Unemployment Tracker will help you manage and contest any claims that you believe were filed without proper justification. Industry experts work with your staff using tools designed relative to UI claims specific to your state with a customized dashboard with regular updates.

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