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Protecting Your Firm from Unemployment Liability


In the real world of business, turn over happens. Whether you cut ties with an under performing employee, experience layoffs within your company, or a star performer decides to join the competition or move across the country, turn over happens. Along with the expense of hiring and training new employees comes an expense that many companies can avoid, unemployment liability. Especially in economic times where every sale matters and every expense is scrutinized, it is the time now to get knowledgeable and start protecting the assets of your firm.

Although unemployment benefits vary from state to state, the unemployed are eligible to file for unemployment immediately after leaving a company. Depending on the state, unemployed can qualify for benefits any where from 14-30 weeks earning $15.00 to $400.00 per week, based on their previous earnings, so long as they can prove that they are actively seeking a new position. You can apply for extended benefits to go beyond 30 weeks in certain circumstances. As a company, your costs can add up quickly and continue for months. Of course the benefits are in place for those great employees who are swept up in a downsizing, or those individuals who have given their all, but the position is clearly not the right match. But what about those poor performing, negative and even insubordinate employees? Or employees who that have chosen to stay at home or try a new career? These are the instances where you need to protect your firm and fight for your rights.

The three most important things to remember when protecting your firm from unemployment liabilities are documentation, documentation, and, yes, documentation. With nearly 10 years of experience working with clients and employees alike, I’ve found that creating and distributing a thorough employee guide, citing incidences, and requiring a resignation letter, all need to be considered in order to protect your company from unemployment liabilities.

Let’s start with employment guides. Create a thorough employee guide to provide to each employee at the time of hire. This guide should be clear about the expectations that you have of your employees, from their attendance in the workplace, the attitude that they have in the office and with clients, to dress code and cell phone/Internet usage policies. Have each employee complete a signature of receipt of the employee guide, notating that they have received, understood and agree to abide by the terms. If you are put in a position to release an employee due to a violation of the employee guide, you can include the employee guide and signature of receipt in the packet of information you will send to the unemployment office. If the employee directly violated the employee guide, you will have evidence that the policy was known, and therefore an acceptable reason to terminate occurred.

Secondly, citing all incidents is vital. Think you will remember each time that employee was late or called in “sick”? Do you think you will remember the dates in which you caught your salesperson surfing the Web instead of digging for prospects? How about each time that employee uses foul language or acts inappropriately or not in accordance with your firm’s employee guide standards? Unfortunately with business demands today, the answer is probably not. It is increasingly important that each employee has a physical and electronic file with data regarding their performance, attitude and attendance.

Along with documentation of events, make sure that you document your efforts and what steps you have taken as an employer to let the employee in question know that their performance is unacceptable. Establish a system of verbal and written warnings, letting the employee know that future incidents of this nature will result in further disciplinary action, leading up to and including termination. Make sure that your efforts are timely, factual, and that you have a signature from your employee notating that they understand what is expected of them, and know that it is in their hands to make the required improvements. In the event that the frowned upon behavior continues, again, focus on timely execution of your system. Please note that if you have warned an employee for their attendance, you cannot terminate them for Internet usage. You must execute a separate disciplinary action process for new undesirable behaviors that arise. Should you be in a position to have to terminate your employee, you can simply provide your documentation, including written warning forms with signatures to the unemployment office and avoid a “he said, she said” battle of wills.

Finally, the importance of resignation letters needs to be addressed. Unfortunately, even the best companies have people leave. Lives and priorities change, another firm may offer a more attractive compensation package, or your employee may have decided to head out on an adventure to see the world. Whatever the case, when an employee leaves his or her employment on their own volition, your firm is not liable. To quickly and easily protect your firm, simply ask that your employee submit a letter of resignation, indicating that they have chosen to sever ties with your company. This letter alone can be sent to the unemployment office and take away any liability on the part of your firm.

In addition to the resignation letter your firm can create a standard “Employee Separation Form” that each employee must complete and sign at the time of their exit interview. The Employee Separation Form indicates the reason the employee was terminated, for example, attendance, misconduct, position eliminated, or resignation. If it is a resignation, the employee will specify their reasoning for leaving the company, such as, relocation, company culture, employer expectations, or compensation. This not only releases you from liability, but also teaches you about your company and the environment you are providing to your employees. You may find patterns in the reasons employees are leaving, and you can adjust your policies or hiring processes accordingly. Finally, the form can include an acknowledgement statement for the employee to sign, signaling that they understand any existing privacy agreements and agree to abide by their terms, as well as, denote that they have no health conditions as a result of employment with your firm.

As a rule, protecting your assets can be an easy task as long as you stay organized and vigilant. Keep in mind that although unemployment liabilities and turnover can be a burden, you do have options! Many recruiting firms offer programs to relieve liability from your company until you are confident that the candidate is the right fit for your firm. Celebrity Staff offers payrolling services, temporary or contract workers, as well as a Match HireÒ program. For each of these options, Celebrity Staff will take on the burden of payroll, unemployment taxes and even benefits for the candidate. As the employer of record for the candidate, Celebrity Staff will also offering consulting on any employment-related issues, coaching, and disciplinary activities.

Although it can be difficult to lose an employee, hiring a replacement can bring many exciting things. New employees bring fresh ideas, new enthusiasm and vigor to help the company reach their goals.

About Sarah Bonow, Celebrity Staff Operations Manager

Sarah Bonow

Sarah Bonow

Sarah B. has worked for Celebrity Staff since 2001. She was hired as an Administrative Assistant, and since then, she has been promoted several times to her current position of Operations Manager. Sarah assists in the management of both clients and prospective candidates while overseeing the day-to-day happenings at Celebrity. Sarah has a Bachelor’s degree in Marketing and is working toward a CPC. Off the clock she likes to run and is learning how to play golf.

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  1. By Prasad Joshi

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