Any employer who terminated or laid-off an employee over the last year—including financial planning practices— should be aware of the unemployment benefits filing and award process.
A base period of wages is used to calculate the amount of unemployment benefits paid. This base period can extend back a year or more depending on the state, so if you were a previous employer during this period, you’ll most likely get a notice and need to respond. And responding is important, because if you don’t respond and benefits are paid, you could have a portion of the benefits charged against you. As a result, the state pays the benefits to the former employee, and you make up for this through higher contributions to the unemployment fund.
Here are some other common questions about unemployment benefits:
Are benefits awarded to any employee who is terminated or quits?
No. Each state has its own criteria, but generally, an employee who is terminated through no fault of their own could receive benefits.
What can I do as an employer?
Keep good records. Document why an employee quits or is terminated. This can be as simple as written notes signed and dated by you and other witnesses. Documentation should also include written notices from the employee including resignation letters. You can also keep notes from an exit interview.
If you are terminating for poor performance, make sure you have written documentation showing what happened, the actions you took, and your communication to the employee about what should happen next and the results if he or she fails to follow through. This should contain signatures of the employer and the employee.
Hire slowly. Understand the qualities and abilities needed for the job and have a process to find the right person. Define the career path so that you know if you’ll be able to retain the employee.
Train effectively. Employees should understand what is expected, and you should have a program to train them. Unemployment benefits are often rewarded because the employee didn’t know what was expected and the training was inadequate.
Discipline/coach timely. Do it right away and document.
Terminate decisively. Think of your business and remaining employees first. You have to be fair, but you also need to act when it isn’t working out.
Mary Dunlap, CFP®
Mary Dunlap Consulting