The majority of employers in the U.S. are required to pay taxes to help fund state unemployment insurance programs. If a number of unemployment claims are filed by former employees, your company’s tax liability could substantially increase. How your company will be affected by a particular claim will depend on many different factors.
Status of the employee – As a business owner, you only have to pay into unemployment for individuals classified as “employees” under the law.1 Independent contractors, on the other hand, are not entitled to unemployment benefits. Depending on the state in which your company is based, other types of workers may be exempt from unemployment requirements, as well.
How long the employee worked for you – Unemployment benefits are based on wages reported during a “base period.” The base period does not immediately precede the termination, however. Instead, it looks like the following:
- Quarter in which the claim is filed
- Prior quarter is not included (lag quarter)
- Four previous quarters are the base period.
If the employee only worked for you a short time and you did not report any wages during the base period, you will not be affected by the unemployment claim.
The type of separation that occurred – Even if an employee is non-exempt and worked for you during their base period, they are not eligible for benefits if they left their employment voluntarily or were fired due to misconduct.
These are only some of the factors that can affect your unemployment liability and an attorney can closely evaluate your situation and advise you on the best course of action.
Consult with a national unemployment attorney today
At the Law Offices of Kenneth P. Carp, we understand the ins and outs of the complex unemployment system from state to state and can provide important counsel and guidance on how to handle unemployment claims. Unwarranted unemployment claims can damage your company’s bottom line and we can help ensure that your business is not exposed to unnecessary liability for former employees. If you need any type of assistance, please call our office at 636-947-3600 today.