Topic Outsourcing HR / PEO,

5 Ways to Control Unemployment Insurance Costs

5 Ways to Control Unemployment Insurance Costs

Small businesses have many costs to shoulder, including unemployment-related. But not all of these expenses have to be significant. You can take steps to reduce your unemployment insurance (UI) costs, saving your business money. 

Every time an unemployment claim is processed, your rates go up. Fortunately, you have options available to you that can help you reduce the number of claims filed against your company and reduce your overall financial burden. 

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How to Control UI Costs 

There are five key ways you can control your small business unemployment costs:  

HR Outsourcing 

Outsourcing unemployment claims is one of the best ways for small businesses to control unemployment costs. You can do that by outsourcing your HR needs. Your outsourcing partner will review claims, challenge invalid ones, and even go to the hearing for you. 

HR outsourcing is becoming a popular option for small businesses. From payroll and compliance challenges to unemployment claims management, your company will see vast savings of both time and money when you outsource your HR needs to a trusted partner.  

Hire Conservatively 

Many small businesses want to scale up rapidly. They want to hit that next growth phase and keep going to new heights. That means hiring more employees and quickly training them to do the work you need them to do.  

But when you hire too fast, you risk higher turnover rates. If you don’t put the required effort into adequately training your new employees, they won’t feel like a part of the team and will be less likely to stick around.   

By limiting the number of new hires you make at any one point, you limit the possibility of turnover. When you limit turnover, you’re less likely to have more unemployment claims.   

Document Everything 

With few exceptions, the only reason a former employee would be entitled to unemployment benefits is that they were terminated. However, depending on your state laws, you may have grounds to deny their unemployment benefits. This is why documentation is crucial.  

If you terminate an employee for failing to meet goals or deadlines, or you terminate them for inappropriate workplace behavior, you need to be able to prove your accusations. Simply saying that the employee failed to correct their behavior will not be enough — you’ll need evidence. 

That evidence comes in the form of documentation. When you meet with an employee to discuss their performance, you must document everything. Put the documentation in the employee’s personnel file. If the employee ever files an unemployment claim, you will have documentation that may help you deny the employee’s request for unemployment benefits. 

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Prevent Invalid Claims 

Unemployment claims management requires a keen eye for detail and an intimate understanding of the law. Suppose you have a single in-house HR employee managing unemployment claims, along with myriad other job duties. In that case, they likely don’t have the time or knowledge to give unemployment claims the attention they deserve. Making a mistake on a claim or failing to object to an invalid claim, even innocently, could cost your company considerably. 

That’s why partnering with an HR outsourcing company is your best bet. With the help of an expert HR resource, they can manage your unemployment claims for you. They will know what to look out for and how to object to invalid claims. They will also spend less time looking for a reason to object to valid claims, saving your company time and money

Proactive Placement 

When an employee leaves a company, few businesses offer outplacement services. This is a missed opportunity because companies can reduce the size of an unemployment claim if the employee finds a new job quickly. Reducing the size of unemployment claims reduces the rate increase that results from processing new claims. 

Why Outsourcing is Optimal 

Outsourcing HR is your most optimal choice to control your company’s unemployment costs effectively. A comprehensive HR outsourcing provider will manage your unemployment claims process by enabling all of the above cost control measures.  

Your partner will provide you with accurate legal guidance, help you hire conservatively, ensure absolute compliance with employment laws, help you keep your employee personnel files in order, help recently terminated employees find a new job, and challenge invalid unemployment claims on your behalf. 

Managing unemployment claims is not sexy work, but it is absolutely necessary. There are many small business costs you cannot control. By being proactive with the ones you can control, like your unemployment costs, you can help to keep your company moving forward. 

What Today's Business Owner Has to Know About HR

Mark Morter

Mark Morter

As the National Sales Director, Mark has over 25 years of sales and sales management experience, 14 of which have been in the PEO industry. He has built, expanded, and turned around sales teams and markets. Mark is known for driving growth and revenue and has been recognized for the recruitment and development of Award-winning sales professionals.