As an employer in Arizona your business is required to provide unemployment benefits for those individuals who have become unemployed through no fault of their own. The Arizona statute specifically says:
“Economic insecurity due to unemployment is a serious menace to the health, morals and welfare of the people of this state. The achievement of social security requires protection against this greatest hazard of economic life. This can be provided by encouraging employers to provide more stable employment and by the systematic accumulation of funds during periods of employment to provide benefits for periods of unemployment.” ARS Section 23-601(in part).
In Arizona employers pay an unemployment insurance (UI) rate on the first $7,000 in payroll per employee. The rates range from .03% to 7.17%. This rate is adjusted annually so that the UI tax rate produces only the net required tax yield each year. The rate for a new business is 2%. The average rate in Arizona in 2014 is 2.4%. If you have numerous unemployment claims and a significant amount is paid out to unemployed workers, then your rate next year will go up to re-balance what has been paid out. If you have no claims or very few claims, then your rate will go down and you will pay less on every $7,000 in wages per employee.
Because unemployment insurance is more expensive if is used more by unemployed workers, it is in your company’s best interest to keep unemployment claims low. To do this you must make sure that any claim that is paid is a legitimate claim. Employers have 10 days to respond to an unemployment claim. Unemployment claims are based upon many criteria. The most significant to an employer is that claims are paid if it is determined that the claimant is “unemployed through no fault of their own.” The unemployed worker can receive benefits as long as they were not fired for “misconduct.”
In order to deny coverage for a terminated employee you must demonstrate that the employee was terminated for misconduct. Common examples of misconduct include:
- Absences or tardiness – you should have a company policy for this in your handbook.
- Deliberate violation of employer rule – an employee that is terminated for deliberately violating a company rule will not receive unemployment benefits.
- Insubordination or not following employer’s instructions – failure to follow an employer’s instructions can be misconduct.
- Failure to meet normal expectations of behavior – if an employee is trying to do their job to the best of their ability but cannot perform the job it is not misconduct. However, the following acts are misconduct: stealing, falsifying records, sleeping on the job, being intoxicated, fighting, and disloyalty (aiding a competitor).
The bottom line is that unemployment claims are expensive, time consuming and not productive. Make sure you have an employee handbook and that you follow it. Also, respond to every unemployment claim. If the employee was terminated for cause and you have properly followed your procedures, then you will save your company a negative charge against your unemployment insurance account and thereby saving your company money.
If you have questions about employment benefits call 480-733-6800 and ask to speak with Dennis Robbins.