Successful business owners understand their costs and have a strategy for controlling them, and that is especially true for unemployment insurance taxes.
"For Idaho employers, unemployment insurance taxes can be unnecessarily high," Department of Labor Director Roger Madsen said. "The Department of Labor is responsible for collecting all the unemployment taxes owed by businesses, but we also do everything in our power to help employers keep those taxes down."
The department provides a wide range of business services to help employers grow and succeed which are detailed online at labor.idaho.gov. According to Madsen, following a systematic approach to controlling unemployment costs can greatly increase a business’s chances for success.
1. Register the Business Properly - Failing to submit an Idaho Business Registration form within six months of becoming a covered employer may result in a penalty. Instructions on registering can be found at http://business.idaho.gov.
2. Recruit the Right Employees – Making the right hiring decisions on hiring will save businesses money in the long run. Employers can access current information about work force trends, economic conditions, demographics and wages online at lmi.idaho.gov. Employers can also take advantage of the department’s online searchable database which contains the résumés of thousands of active Idaho job seekers at labor.idaho.gov/IDWorks/Ejentry. Department staff are also available to personally help businesses with recruiting, testing and hiring employees.
3. Understand Idaho Labor and Unemployment Insurance Tax Laws - A wide range of state and federal laws governing wages, working conditions, youth employment and other employment practices can be accessed on Labor’s Web site at labor.idaho.gov/wh. It is illegal to try and achieve a lower unemployment insurance tax rate by creating a new business and simply moving current employees from the old business to the new one. This is called State Unemployment Tax Act dumping, and businesses caught doing it can be prosecuted and fined $5,000.
4. Issue an Employee Handbook - A clearly written, understandable employee handbook lets a business set policy on work hours, job duties, breaks, fringe benefits like vacations and holidays and other workplace issues like oral and written job performance warnings. Fairness and consistency are important. Keeping records is crucial because the burden of proving work-related misconduct falls on the employer. By implementing and communicating clear employee policies and workplace expectations, employers can minimize unemployment insurance costs. Over 60 percent of all dismissed workers are ruled eligible for unemployment benefits, in many cases because employers cannot produce evidence of policy violations that would make the worker ineligible for benefits or they simply fail to respond to the Idaho Department of Labor’s request for information on the dismissal.
5. Protect Your Unemployment Insurance Account - Responding quickly and effectively to unemployment claims and Department of Labor notices will ensure employers get their day in court. The employer's side of the story, when provided within the legal time period allowed, helps the department detect and prevent improper benefit payments. If payments are deemed improper, they are removed from the employer’s account, which can check any future tax increases.
6. Understand Unemployment Eligibility Requirements – Dismissed workers are only entitled to benefits when they become unemployed through no fault of their own such as:
• Being laid off due to lack of work.
• A reduction in hours resulting in less than full time work.
• Being discharged for reasons other than misconduct. The courts have determined that employee misconduct occurs when there is an intentional disregard of the employer’s interest, a deliberate violation of the employer’s reasonable rules or a disregard for the employer’s standards of behavior if that behavior was not objectively reasonable in the particular case. The employer must prove the misconduct.
• Quitting for good cause in connection with the job. The law allows benefits after quitting a job if the worker did so because of unacceptable working conditions, unacceptable job tasks or an unacceptable employment agreement. Workers must prove such conditions exist and that they explored all alternatives prior to quitting.
7. Pay Attention to Detail – Employers should understand how to document their side in disagreements over worker benefit claims and file true and accurate quarterly employment reports. Employers who fail to file or file false reports may be fined up to $250 or 100 percent of the tax due, whichever is greater. Make sure tax bills are paid on time and in full. Past due taxes accrue interest at 150 percent of the statutory rate and subject to late penalties.
8. Actively Manage Unemployment Insurance Accounts – Use the department’s online technology at labor.idaho.gov/ECORE. Instructions are included for employers on how to create an account and sign in, view the statement of benefit charges and the statement of liability, and report employees who quit or are terminated.
9. Report Unemployment Insurance Fraud - Unemployment insurance fraud is a crime that hurts every honest business and worker. Abusing the system depletes the trust fund and drives up unemployment insurance taxes for complying businesses and frustrates law-abiding claimants. Employers who fail to report workers on their quarterly reports or who pay workers under the table gain an unfair competitive edge over legitimate employers. Claimants who fail to report earnings for work performed while eligible for unemployment benefits cause former employers’ tax rates to climb. Fraud can be reported anonymously online at labor.idaho.gov/idworks/uifraud or by calling toll free (800) 672-5627.
Consultants at all 25 Idaho Department of Labor local offices throughout the state are available to help employers and employees with unemployment insurance questions and problems. For a list of local offices, go to labor.idaho.gov and click on Local Office Links in the upper right hand corner of the page.