DLO / Thursday, January 1, 2009 / Categories: Springfield Business Journal Article, Blog Post Unemployment Insurance Unfortunately, because of the current bad economy many people are being laid off. If you are laid off, you will want to apply for unemployment benefits. If you are an employer, you will want to know when you can be charged for unemployment claims. Here are some of the basics. Unemployment Insurance is a combined state-federal partnership, financed by two different employer taxes. The Illinois Department of Employment Security ("IDES") collects quarterly employer contributions (taxes) in order to pay unemployment benefits to eligible, unemployed workers. In addition, the federal government funds the administrative costs of the employment security programs in each state through a quarterly federal unemployment tax ("FUTA"). The Illinois unemployment tax is based on the number of employees, the amount of their wages, and the tax rate. Unemployment tax is paid on the first $12,300 of each employee's wages. (The "wage base" for 2009 is $12,300. The wage base for 2008 was $12,000). Each year, as required by the Illinois Unemployment Insurance Act, the IDES assigns your business the rate it will use to calculate quarterly contributions. Your contribution rate is based on your own experience. If you are a new business, you will be assigned an entry-level rate for your first two or three years, depending on your experience with unemployment claims. After that, you are assigned a variable rate based on your own experience and the experience of the entire state. The variable rate reflects the amount of benefits IDES has paid to your former workers in past years and the size of your payroll. For 2009, the maximum rate is 6.8% and the minimum rate is .6%. Therefore, each employer will pay the State of Illinois unemployment insurance taxes of at least $73.80 ($12,300 x .6%) and up to $836.40 ($12,300 x 6.8%) per employee. Because your tax rate is affected by the number of unemployment claims your business generates, you are informed of each claim made against your business. You are entitled to protest any claim with which you disagree. If your protest is denied, you have the right to appeal that decision. When a worker files a claim, IDES will mail the employer a Notice of Claim. The Notice of Claim will state that you appear to be the chargeable employer for that claim and will include a form that you can use to protest either the claimant's eligibility or your status as chargeable employer – or both. You have 10 days to file your protest by returning the form. It is important that you reply by the due date indicated on the form; otherwise, you forfeit the right to appeal any subsequent decisions. Not all unemployed workers are eligible for unemployment insurance. A worker is not eligible if (1) he voluntarily quits a job without good cause attributable to the employer; (2) he is discharged for misconduct connected with the job; (3) he is involved or participating in a labor dispute. Benefits may be discontinued if the worker is physically unable to work, he fails to adequately search for work or he is unavailable for work, including refusal of a suitable job offer or refusal of a former employer's recall. If a worker is employed by a business for less than thirty days, that employment is generally disregarded. A claim by the employee will not be charged against the short term employer, but may be charged against a previous employer. As an employer, you should keep in mind that the IDES is favorably inclined toward the employee and allowing the employee to collect benefits. Therefore, if you intend to protest a claim, especially for misconduct, you must provide ample documentation of the behavior. Although there is no hard and fast rule, it’s unlikely that you will be able to challenge benefits for a slight and single instance of misconduct. On the other hand, if such instances are repeated, or if a single incident if more severe, it’s more likely that you can successfully challenge benefits. On that topic, misconduct is the most common reason that employers challenge liability. At the same time, it’s one of the more misunderstood concepts in this area of the law. For misconduct to count as a disqualifying event it must be deliberate and willful. That is, unintentional poor performance doesn’t count. For example, if you fire a salesperson because he has bad people skills, you will likely be charged. In fact, the law states that persons discharged for incapacity, inadvertence, negligence or inability to perform assigned tasks should receive benefits. If a worker is eligible for benefits, he can receive up to twenty-six full weeks of regular benefits during the year after he first files a claim. During periods of high unemployment, additional weeks of extended benefits may be authorized. As of November 23, 2008, a worker can receive up to twenty weeks of emergency unemployment benefits in Illinois. The amount of weekly benefits paid depends on the average weekly earnings during the two quarters in which earnings were highest. There are minimum and maximum weekly benefit amounts; within those limits, a worker's weekly benefit amount will be somewhat less than half of his former earnings. The weekly benefit payment may be increased for dependents or decreased if the worker receives income from other sources. Currently, the minimum amount of benefits for an individual is $51 a week, and the maximum is $369 per week. Claimants with non-working spouses can receive up to $439 per week, and up to $511 a week with dependent children. Finally, in certain instances both claimants and small employers are entitled to free legal representation. In essence, the State contracts with private law firms who, depending on several factors, will represent you for free during certain parts of the process. Small employers are, generally speaking, considered as having less than 20 employees. Previous Article Federal Tax Update Next Article What Does the American Recovery and Reinvestment Tax Act of 2009 Mean to You? Print 1068