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How to Prevent Paying Taxes on Your Former Employees

Often the state sends correspondence to employers that gets ignored or put off because of a lack of understanding of the importance of the forms. One of the most important forms that the Unemployment Insurance Agency (UIA) sends is Form 1575, Monetary Determination.

This is the first notice sent to all employers within the base period (typically the past four calendar quarters) that a former employee has applied for unemployment. Pay close attention to the notice, specifically the reason that the employee has given for separation from your company. If the employee stated that they are no longer working because of lack of work when in reality they were actually fired, you have to provide additional information to the state within ten days of the mailing date of the notice. If you do not respond timely, the state will assume the employee qualifies, and the weekly benefits will get charged to your account. These amounts ultimately affect your unemployment tax rate.

An employee should not be able to collect unemployment if they voluntarily quit or if they are fired for any of these reasons: misconduct, intoxication, theft, assault and battery, willful destruction of property, drugs or refusal of suitable work. But proving these things is key to preventing a claim from being a “he said/she said” situation, in which case the employee almost always wins.

The employer’s burden of proof involves proper documentation by the proper individual(s) that the firing was for misconduct connected with the work or that the employee voluntarily left work. Each incident leading to the firing should be documented at the time of the incident by the employee’s supervisor, and this documentation should be shared with the employee and put in their employment file. Also, the act of firing the employee should be directly related to an incident for which the employee does not have an adequate excuse. For instance, in a court case, an employee who was regularly tardy was fired after a particular incident of being tardy, but he was allowed to collect unemployment (affecting the company’s unemployment tax rate) because he had a valid excuse for being tardy that one particular time.

Simply firing an employee because they have unsatisfactory performance will not make them ineligible for unemployment. Remember – proper documentation is very important and do not ignore correspondence from UIA as this could end up costing you more tax dollars.

As always, do not hesitate to contact us with any of your payroll or unemployment questions. Also, there is an Employer Advocacy Program available at no cost that can assist you with preparing for and participating in hearings to fight unemployment benefit claims. You can sign up for this program by calling 1-800-638-3994.