Unemployment can be a nerve-racking and taxing subject. Surprisingly, a business’s actions could impact its own DES tax rates, and contesting unemployment insurance claims can be a murky battle. A few mistakes can have a huge impact on a business that may often result in loss of revenue over an extended period of time. However, did you know that partnering up with a staffing agency can reduce aggravation, and help reduce some of those costs? If you’re an employer, here are a few things you should know about unemployment and how staffing services can help keep your taxes to a minimum – saving money in the long run.
How unemployment works
Unemployment is set up as a safety net for those who lose their jobs through no fault of their own. People who lose their jobs can find relief by receiving weekly paychecks from the government. Typically, unemployment benefits are paid by a tax on employers that feeds into a trust fund. If an ex-employee needs to collect unemployment insurance, the money comes out of that fund. The tax rate on employers is determined by the number of employees currently working, and layoff history. Unemployment tax rates can range anywhere from 0.03% to 8.91% in Arizona based on these factors. The higher number of layoffs or terminations where the ex-employee is not at fault, the higher the tax rate. Claimants can collect unemployment benefits for up to 52 weeks, potentially costing employers thousands of dollars a year.
When can one claim unemployment?
In most cases, an ex-employee can claim benefits when they were terminated without evidence of misconduct. The Employment Security Law of Arizona defines misconduct as “any act or omission by an employee which constitutes a material or substantial breach of the employee’s duties or obligations pursuant to the employment or contract of employment or which adversely affects a material or substantial interest of the employer.” (Arizona Revised Statutes 23-619.01(A)). This usually means a violation of a specific work rule or an unwritten rule that employees are expected to know (such as stealing). However, this definition can be problematic because the scope of violations can be subjective, to say the least. Poor performance or incompetence, for example, do not qualify as misconduct in most cases, and employers are expected to provide substantial documented evidence to prove misconduct. This could leave employers vulnerable to opportunistic behavior from a minority – potentially leading to thousands of dollars being lost. Unfortunately, for most employers, this scenario is an unavoidable risk associated with day to day business. The key to avoiding such a scenario, however, would be to shift this associated risk somewhere else.
How can staffing services help?
By taking advantage of a service such as temp to hire placements from staffing agencies, employers can shift the risk of the scenario described previously, and avoid potentially raising the rates of their unemployment taxes – saving thousands of dollars! Using temporary seasonal or 90-day temp to hire services as an added method of screening can help ensure that employers are employing quality, long-term, and trustworthy candidates. For candidates, this provides a moment to showcase what they’re capable of, and truly prove their value as the hard working individuals they know they are!
Need help keeping your DES tax rates low? Contact Continuum Consulting Inc. today, and let us help you find the best candidates that fit your needs!Tags: Management, recruiting, Small Business, staffing agency, Unemployment, Warehouse Management