Recent Legislation to Assist Employers
with Unemployment Claims
By Scott Buchanan
The recent recession took its toll on Florida with record unemployment. Along the way the state borrowed more than $2.2 billion to pay unemployment benefits, and many employers were left with the feeling that it wasn’t worth the effort to challenge an unemployment claim from a terminated employee because the claim is always granted regardless of the underlying facts. Indeed thousands of claims have been paid resulting in both an unemployment system that is deeply in debt and employers with substantially higher unemployment tax rates. In fact, many employers now pay the state maximum rate of 5.40%.
Because a portion of the debt has been outstanding for at least 2 years, Florida now faces the requirement to pay interest on the debt. In February of this year the state distributed special interest assessments to employers as a way of collecting the interest. Employers must remit their payments by June 30th. Our President’s budget proposal does include a 2-year waiver of future interest, and a bill has been introduced into Congress that includes a provision for the waiver of interest.
The recession served to increase the number of comments that we typically receive about the manner in which unemployment benefits are handled and paid. The general consensus among many employers is that the claim from a terminated employee is going to be paid regardless of the underlying facts, so why invest any time to challenge the claim. Employers are simply frustrated and the substantial increase in the unemployment tax rates on January 1 only served to intensify their feelings.
Recent legislation addressing the unemployment claims process will bring additional balance to the system. As a result, employers are more likely to participate in the claims process in an attempt to control their unemployment tax rates.
One of the first components of the recent legislation changes the “rule of liberal construction.” The former wording stated that all doubts relating to a claim for benefits be resolved in favor of the claimant, whereas the amended wording takes a more balanced approach by requiring that all doubts be resolved in favor of conformity with the applicable unemployment statutes. In other words, the employer is no longer starting off behind the eight ball in terms of challenging a claim for benefits by a terminated employee.
Another important series of changes addresses the disqualification for benefits. The term “misconduct” has been clarified to include the following: a) demonstrating conscious disregard of an employer’s interests and found to be a deliberate violation or disregard of the reasonable standards of behavior which the employer expects of his/her employee, b) specific types of carelessness or negligence, c) chronic absenteeism or tardiness in deliberate violation of a known policy and unapproved absences following a written reprimand or warning relating to such unapproved absence, d) willful and deliberate violation of a standard or regulation of this state by an employee of an employer licensed or certified by this state, which violation would cause the employer to be sanctioned or have its license or certification suspended by this state, and e) violation of a known employer’s rule. These clarifications are intended to assist an employer that has terminated an employee for misconduct when that employer is challenging a claim.
Furthermore, an unemployed individual is eligible to receive benefits only if the Agency for Workforce Innovation (the unemployment arm of state government) finds that: a) the individual has registered with the Agency for work and subsequently reports to the one-stop career center as directed by the regional workforce board for reemployment services and b) participates in an initial skills review as directed by the agency. The individual will be disqualified if the Agency finds that the individual has failed without good cause to actively seek work, apply for suitable work and accept suitable work when offered to him or her or to return to the individual’s customary self-employment when directed by the Agency.
The legislation also reduces the maximum number of weeks of potential unemployment benefits from 26 to 23, but the actual number of weeks is variable based on the Florida unemployment rate. The number of weeks will drop to as low as 12 weeks when the unemployment rate drops to 5 percent or lower.
Acknowledging that the recession added substantial claims to the experience of most employers, the Legislature reduced the amount of claims posted to the account of an employer by 10% during the most difficult period of the recession beginning on July 1, 2007 and ending on March 31, 2011. Several news organizations have suggested that employers will experience a 10% reduction in the required employer contributions, but this outcome is unlikely for 2012 because the annual unemployment tax rate is based on an algorithm, the components of which include 1) the claims history for the most recent 3 year period, 2) taxable wages for the same period, 3) an adjustment factor, and 4) a variable factor. The claims history is only one component of the overall computation. Furthermore, the professional staff of the Florida Commerce and Tourism Committee has estimated that the minimum unemployment rate (generally reserved for those employers with no claims) will increase from 1.03% for 2011 to 2.43% for 2012, and the taxable wage base is set to increase from $7,000 for 2011 to $8,500 for 2012.
In conclusion, the changes to the eligibility for unemployment benefits will eventually be instrumental in reducing the unemployment tax rate and provide welcome relief for most Florida employers. In the meantime, rates are set to rise for 2012 as Florida attempts to continue funding unemployment claims and to retire the $2.2 billion in loans.
About the Author
Scott is the president and CEO of Human Resources, Inc. (HRI), a professional employer organization (PEO) based in St. Petersburg and licensed in multiple states. HRI is one of only 30 PEOs in the nation and the only PEO in central Florida accredited by the Employer Services Assurance Corporation. Scott is active in industry affairs and is currently a member of the Government Affairs Committee of the National Association of PEOs (NAPEO) which takes him to our nation’s capitol and/or to Tallahassee several times each year. You can reach Scott at: sbuchanan@HRinc.com or www.HRinc.com