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Calculate Your Business’s Unemployment Numbers Correctly to Avoid Claims and Tax Problems

By April 20, 2022December 16th, 2022HR

Unemployment InsuranceUnemployment relief available through federal and state governments during the pandemic didn’t require employers to file claims against their unemployment insurance. However, those relief measures ended last year, and pre-pandemic protocols and procedures resumed.

We’ve observed that improper management of departing staff and unemployment claims over the past two years is now causing problems for some businesses.

Inaccurate employment records
Employers pay for Unemployment Insurance as a business cost through the State Unemployment Tax Act (SUTA) and the Federal Unemployment Tax Act (FUTA). Tax rate calculations consider the history of UI contributions and benefits paid to former workers, growth of an employer’s payroll and the overall unemployment conditions for the state.

Regardless of how the pandemic impacted your workforce, it’s critical to maintain accurate payroll records so that UI taxes are not overpaid or underpaid. Overpayment affects your business’s bottom line, and underpayment may result in serious legal accusations of ‘SUTA dumping’ (intentionally underreporting numbers in order to lower tax liabilities).

Incomplete or late paperwork
One of the top mistakes many employers may have made during the pandemic is not completing and returning paperwork to their state’s unemployment insurance division on time. Failure to respond to requests for information in a timely manner likely caused some employers to lose the right to appeal claims, request a claim hearing or protest benefit charges to their account.

Administrative errors leading to overpayment
In one case, former employees of a restaurant group have been asked to pay back thousands in overpaid unemployment benefits, as state officials claim that the employer made a mistake in its filing of unemployment claims. Typographical errors, misspellings and incorrect digits in numbers could lead to unintentional fraud and trigger overpayments.

The employer cited in the article above is now entangled with both the former employees and the state’s department of labor.

If you need assistance with unemployment claims management and its related administration, please reach out to MarathonHR today.

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