Service Bulletins

Ruminations About Resignations

May 18th, 2012

In the last two months there have been three states (TN, UT, and WV) that have amended their UI laws relating to the situation where an employee resigns because his/her military spouse has been reassigned and relocated.

In Tennessee, SB 884 was signed by Governor Haslam on April 4, 2012. This bill permits an employee to qualify for UI benefits if he/she terminates because his/her military spouse has been reassigned and relocated. The employer’s UI tax account will not be charged for such benefits.

In Utah, HB 263 was signed by Governor Herbert on March 15. This bill also grants UI benefits and relieves the employer of benefit charges when an employee voluntarily quits to follow a military spouse, and when it is impractical for the employee to commute from the new locality.

In West Virginia, HB 4007 was signed by Governor Tomblin on April 2, 2012.  This bill also grants UI benefits to the employee who voluntarily leaves to accompany a military spouse who is on active duty and who has been reassigned.  As in Tennessee and Utah, the employer is not charged for such benefits.

We first noticed a trend to approve UI claims filed in this situation four years ago, when only eight states (AR, CT, FL, GA, MT, NM, SC, and TX) had such statutes in place. Since then, the Recovery Act was enacted in 2009, providing incentives to states to grant benefits when any employee resigns to accompany a spouse (whether military or non-military) who has been transferred. 

Now there are 42 states that grant benefits when an employee moves to accompany a spouse (military or non-military) who has been transferred. The three states that recently passed legislation (TN, UT, and WV) did not adopt the broader provisions relating to workers with non-military spouses.

As a reminder, when regular UI benefits are paid, there are circumstances when such benefits are not chargeable to a specific employer’s UI tax account (sometimes referred to as noncharging or relief from charges). In such cases, the benefit payments do not directly affect the employer’s UI tax rate. Such benefits are pooled costs. Nevertheless, the UI benefit payments are drawn from the state’s UI trust fund, impacting on the future tax rates for all experience-rated employers in the state. Employers in Tennessee, Utah, and West Virginia will indeed fund the expansion of benefits resulting from recent legislation.

The granting of UI benefits when an employee resigns because a spouse is transferred is an interesting public policy issue.  As a practical matter, part of the cost of relocation (lost wages) has been shifted to employers who are already adversely impacted by losing the employee, and who had no control over the employee’s decision to resign. Perhaps overlooked is the fact that the employer whose worker has relocated now has the burden of hiring and training a replacement.

Clear to us is the fact that public sentiment has shifted since 2008 to providing more financial support for workers who are compelled to resign for legitimate family reasons.  As a result, a whole new pool of UI eligible individuals has been created in a relatively short period of time.

A raft of state legislation to grant UI benefits in certain voluntary quit situations has occurred during and in the aftermath of a recession, but the statutes will remain in force when the recession is a distant memory. In most states the long-term impact of this broad expansion of UI benefit eligibility will be UI tax rates that are consistently higher than pre-recession levels.

As always, if there are any questions please contact us.

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Georgia Bill Increases UI Taxes and Decreases UI Benefits

May 10th, 2012

HB 347 was signed by Governor Nathan Deal on May 2, 2012.  This bill is an effort to restore solvency to the Georgia UI Trust Fund, which is broke and has borrowed $760 million from the Federal Unemployment Account.

The bill increases the state unemployment taxable wage base from $8,500 to $9,500 effective January 1, 2013.  This increases an employer’s tax liability by 11.70% for each full-time worker.

Additionally, an adjustment factor will increase, causing UI tax rates for experience-rated employers to increase. The Base Rate Adjustment Factor currently increases an employer’s base rate by 35% to arrive at the total UI tax rate. Beginning in 2013 this factor will increase to 50% whenever the state has an outstanding federal UI loan and a fund balance of less than $1 billion. This constitutes an 11.10% increase in assigned rates.

Realistically, higher UI taxes in Georgia were unavoidable. As a percentage of total wages, UI taxes in Georgia have been significantly lower than the national average for many years. As a result, the trust fund held inadequate reserves when the recession began (see below).

The maximum duration of UI benefits is reduced by this bill, from 26 weeks to a range from 14 weeks to 20 weeks, depending on the state unemployment rate. The maximum of 20 weeks applies when the state UI rate equals or exceeds 9%, as it does now.  The potential number of weeks of benefits decreases as the unemployment rate decreases, settling at 14 weeks when the unemployment rate is at or below 6.50%.

The provision relating to benefit duration is effective July 1, 2012.

Most state UI laws permit regular UI benefit payments for a maximum of 26 weeks.  Georgia joins six other states (Arkansas, Florida, Illinois, Michigan, Missouri, and South Carolina) in reducing the maximum duration of a UI claim.  Last year Florida adopted a sliding scale of 12-23 weeks.

Click here for a copy of HB 347.  As always, if there are any questions please feel free to contact us.

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The UI Claims Process is Becoming More Efficient

May 2nd, 2012

A web-based program named “SIDES” is gaining traction as an efficient way for employers and TPA’s such as our company to interact with state UI agencies. This program has been developed through a partnership between the U.S. Department of Labor and NASWA (the National Association of State Workforce Agencies).

SIDES (State Information Data Exchange System) provides a standardized format for responding to UI claims electronically. It permits us to receive a UI claim form electronically, submit a response electronically, attach documentation when needed, and receive a date-stamped confirmation of receipt. SIDES has the potential to reduce follow-up phone calls from UI agencies, reduce paper handling and postage, and provide more response time for HR Departments by eliminating mail delays.

There are multiple layers of security incorporated into the SIDES program because of the sensitivity of the information that is exchanged.

The state UI agencies are being encouraged and supported by the U.S. Department of Labor to develop SIDES capability.  It is anticipated that 42 states will have SIDES programs in place by the end of September.

At Thomas & Thorngren, Inc., we have been coordinating with NASWA and developing our software to integrate with SIDES for over a year.  We expect to begin implementing SIDES by this fall, as most state UI agencies become operational.  There is no action to be taken on your part, as the interface is between Thomas & Thorngren, Inc. and the state UI agencies.

By investing in the SIDES claim response system, we anticipate that our clients will gain the benefit of additional lead time, which will support our combined efforts to secure favorable outcomes and to avoid unnecessary appeals.

Additional SIDES capabilities are being developed.  It is probable that in the future there will be applications relating to appeals decisions, benefit chargebacks, and earnings verifications.

If you have any questions or concerns relating to SIDES please do not hesitate to contact Gwen Benson at 615/242-8246 or gbenson@tntnash.com.

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