Why Should Your Business Outsource Unemployment Claims?

Originally published March 5, 2021

Updated February 6, 2024

Unemployment claims can be costly, as claims increase the unemployment insurance you pay. This tax increase lasts years beyond the original unemployment claim, leaving a trail of financial burden to your company. Having the proper system to handle these claims and prevent them from occurring helps your company lower these costs and keep funds within your company.

You and your employees, even if you have in-house HR employees, may not be equipped to handle these complex claims in an efficient manner. You also simply may not have the time. Outsourcing HR can increase your employee efficiency and lower your expenses. By letting trained HR experts handle your unemployment claims, your business can see both a time and financial benefit.

Here are some of the critical ways HR outsourcing can help your company handle or prevent unemployment claims from coming back onto your business.

Adhere to Compliance Regulations

One of the most common ways former employees successfully win an unemployment-related lawsuit is by showing a business failed to comply with hiring, firing, or discipline guidelines. Employment law compliance is a confusing and intricate area of business. By partnering with an HR outsourcing company, you gain access to experts who can advise you on the proper hiring, firing, and discipline practices that can keep your business compliant and avoid costly mistakes.

Working with HR experts can aid you in setting up proper processes pertaining to employee performance through improvement plans, which lay out the direct course of action that could result in an employee being fired while making them aware of the proper changes they could make to their work. Including disciplinary information in the employee handbook will also give you justification for letting an employee go due to behavioral reasons.

Outlining these processes in writing – with aid from an HR outsourcer – supports your claims and standardizes a compliant process to ensure you uphold good practices.

Achieve Cost Savings through Good Practices

Every unemployment claim you receive needs to be taken seriously. But that does not mean that all claims are valid. Your HR outsourcing partner can help determine which claims are valid and which are unwarranted. They can also help you respond to unemployment claims accordingly, reducing the number of approved claims, which keeps your tax rate low. Having standardized processes can make this stage more efficient, as it demonstrates the company’s due diligence and effort toward creating a fair system.

Not only does this save your company money by keeping unemployment insurance costs down, but it also frees up time for your internal team. By shifting the unemployment claim work to an HR outsourcing partner, your internal team can focus on your core business needs and revenue-generating activities. This makes your internal team more effective and efficient by shifting complex HR needs to the experts.

A trusted HR outsourcing partner will also regularly audit unemployment claims. Going through an internal audit can bring to light any unemployment claims where your business might be overpaying or, worse yet, ineligible claims on which your business might be paying. This audit process can help keep company assets by shedding illegitimate unemployment claims and further keeping your rates low. This process can also let your HR partner see where your procedures can be updated according to regulatory changes to ensure you maintain compliance over a longer term period.

Receive Guidance on Hearings

Many unemployment claims end up going to a hearing. An unemployment claims administrator may need to speak with the parties and gather additional information before deciding whether the claim is valid. This can intimidate employees who may have to attend the hearing, even if it is just over the phone.

When you partner with an HR outsourcing provider, the HR experts they employ will help your internal team prepare for the unemployment claim hearing and make sure all documentation has been provided. Your HR outsourcing partner will guide you and your employees through the hearing, ensuring that you have properly prepared for the questions you might be asked. Preparation is key to ensuring you answer accurately and honestly.

Outsourcing Unemployment Claims Saves You Time and Money

The right outsourced HR partner can help your company overcome these challenges while still maintaining a positive ROI. Not all HR outsourcing providers are created equal. You need to choose a provider that aligns with your business goals and helps you achieve them in a cost-effective manner.

Unemployment claims trip up many small businesses every day, and they end up paying for it – both in lost time and money. Having an outsourced HR partner you can rely on to respond to these claims ensures your business only pays legitimate claims and helps you and your employees prepare for any hearings. They provide invaluable input that can bolster your company’s ability to grow and flourish.