Contacting the Unemployment Compensation Program during the planning stages of a work force reduction can help your organization reduce unemployment liability, estimate unemployment liability, and provide communication to staff regarding their separation and filing for unemployment benefits.
Allocating Separation Payments: As indicated in the first edition of Reductions in Force, an employer may offer payments to employees for accrued vacation, accrued sick time, payment in lieu of working notice, and longevity pay. Under the MES Act, the employer may allocate these payments over specific periods of time after the last day of work. When an employer properly allocates these payments, the MUA may consider the payments as "remuneration" or earned wages. If the payments are determined to be remuneration, the employee is not eligible for unemployment benefits during the period of allocation. The payment allocation does not deprive the employee of unemployment benefits; it merely delays the commencement of unemployment benefit payments which may reduce the employer's unemployment liability. All payments should be made before the end of the quarter in which the separation occurs to limit future liability.
Salary Continuation Unemployment Benefit Offset: The UCP has worked with some of our members to help them prevent employees from collecting salary continuation and unemployment compensation benefits at the same time. By properly drafting the separation agreement, the employer can elect to deduct the unemployment payments from the salary continuation for an employee who is essentially double-dipping.
Budgeting for Unemployment Liability: The Unemployment Compensation Program currently has a client base of over 200 health care employers in Michigan. We process nearly 1,000 layoff and reduced hour claims per year. This allows us to estimate, based on our experience, the cost of an unemployment claim. We have recent numbers which indicate the average number of weeks claimants collect, the percentage of claimants that exhaust their unemployment benefits, and the average benefit rate. This allows us to effectively estimate what your organization's liability will be per claim.
Review of Separation Policies and Agreements: An attorney will review your organization's separation policies and agreements to determine if any of the payments may impact an unemployment claim. The attorney will assist your organization in developing policies and agreements that will potentially reduce your unemployment liability. Many times by properly allocating separation payments and providing accurate notice to employees, your unemployment liability can be reduced. The UCP also has developed a sample allocated payments letter which can be tailored to meet your needs.
Work Force Reduction Workshop: The UCP has an established work force reduction workshop which has been successfully utilized by several of our members. The workshop consists of an attorney and/or claims representative coming to an organization to speak to the employees about to be laid off regarding the unemployment process. The purpose of the workshop is to minimize anxiety of the employees when filing an unemployment claim. We explain the filing process and the requirements of the Unemployment Agency and help estimate their potential benefit rate. A packet is provided which contains a list of Unemployment Agency branch offices, the unemployment application, a claimant handbook, and the required MUA form which they must take with them to the branch office to correctly identify the employer.
The UCP explains the application process, the importance of reporting to the Michigan Unemployment Agency [MUA], the consequences of refusing work or failing to report earnings, and the importance of providing all relevant information to the MUA. If your organization allocates any separation payments such as payment in lieu of notice, vacation pay, sick pay, or longevity pay, we explain the benefits of this type of payment for the employee - which is to provide a longer period of financial security. At the end of the workshop, we answer any questions the employees may have about filing for unemployment benefits.
This type of workshop is very beneficial to the employer and employee if there are several employees being laid off at the same time. If only a few employees are being let go at a time, the UCP also has an Unemployment Compensation Overview which details the information provided in the workshop.
Review of Layoff Policy: The UCP will review your organization's layoff policies to determine the impact on your unemployment liability in the event that employees are laid-off or have reduced hours. The UCP will make recommendations about your current policy and assist you with developing appropriate language that will help reduce your unemployment liability.
Putting the MUA on Notice: Giving the UCP an advance notice of an impending layoff allows us to interact with the MUA Multi-Claimant Unit in a proactive manner. Contacting the unit in advance helps to expedite the adjudication of each unemployment claim filed. This is especially important when an employer is allocating payments because the claimant will not be able to receive unemployment benefits in error during the allocation period.
Time Savings: Some employers have elected to provide separation information to the UCP at the time of the layoff for each employee that may be filing for unemployment benefits. By doing so, the employer will not have to be contacted by the UCP each time a claimant files a claim for unemployment benefits.