What’s New? Reasonable Assurance

As anEducational Institution” employer the greatest opportunity for avoidance of unemployment compensation benefits is available when “reasonable assurance” of employment is understood and properly utilized.  It is for this reason that we remind and update our educational employer clients of this cost saving measure.

  1. By statute, “reasonable assurance” is available only to “Educational Institutions”.
  1. “Reasonable assurance” applies to any employee of an “Educational Institution”.
  1. “Reasonable assurance” is not an absolute guarantee of employment. The different State Agencies administering claims for unemployment compensation define “reasonable assurance” as a bona fide offer of employment for the next academic term or year. Although jurisdictions might vary on the definition of bona fide, “reasonable assurance” exists when an employer has expressed its intention to employ a claimant and will make a good faith effort to do so.
  1. If properly utilized, claimants/employees of an “Educational Institution” will be ineligible for unemployment compensation benefits during the period between academic terms or years, and during customary and established vacation or holiday recess periods.
  1. Noteworthy is the fact that, even in jurisdictions known to liberally interpret its statute in favor of claimants/employees, the statutory provisions involving “reasonable assurance” are generally interpreted in favor of “Educational Institution” employers.
  1. The proper utilization of “reasonable assurance” requires an affirmative act on behalf of the “Educational Institution” employer signifying its intent to employ/rehire the claimant.

Although jurisdictions recognize verbal as well as written assurance of its intent, we strongly recommend that any assurance of employment be given in writing and whenever possible be able to prove the “offer” by certification and/or written acknowledgment by the claimant.

  1. The offer of “reasonable assurance” of employment should be to the same or similar position.

WHAT YOU SHOULD DO:

  1. Be able to support and document that your offers of reasonable assurance were based on sound judgment and were reasonable in light of historical patterns, customary trend, and current statistical data involving:
  1. overall employment
  2. student enrollment
  3. mandated programs
  4. attrition
  5. expansion or reduction of programs
  6. active collective bargaining agreements
  7. budgetary data
  8. availability of funding

NOTE:  Offers of employment contingent upon fulfillment of certain preconditions may jeopardize an offer of reasonable assurance of employment unless it can be shown that the conditions are not likely to affect the claimant.

  1. With the exception of educational institution employees already protected by contract or tenure, you should provide Reasonable Assurance to employees, both professional and non professional, who can be given a “bona fide” offer of re-employment to the same or similar capacity for the ensuing academic term or year.
  1. You should provide written notice to each individual chosen to receive reasonable assurance. It is best to give reasonable assurance notices, in person, and as early as possible preferably prior to closing for the summer.
  1. The opportunity to offer Reasonable Assurance of re-employment, however, does not end on the last day of school. Reasonable Assurance can be provided at any time up to the commencement of classes in September.
  1. In the event that the reasonable assurance letters cannot be given in person, but must be mailed, we advise you to mail the letters certified return receipt requested. The expense of the mailing will be far less than the potential cost of unemployment benefits if notification of reasonable assurance cannot otherwise be proven.  For example, some of our municipal employer clients publish lists of those employees with reasonable assurance of re-employment in local newspapers.

Questions?  Contact CCC at info@corporatecostcontrol.com or (800)207-6926


Unemployment Tax Update: Employers picking up the tab?

invoiceUnemployment insurance is the largest of government self-funded government programs.   Employers pay into the state and federal agencies and claimants throughout the country collect benefits.  During the Great Recession, more than $155 billion was paid to claimants in two years.  In 2016, $33 billion was paid out in benefits.   The states have begun to recover from the recession, but most states are not ready for another recession.

Of the monies paid every year, many benefits are paid erroneously to groups filing for benefits with stolen identities or by individuals who just do not understand they need to stop claiming unemployment as soon as they go back to work.    During 2015, 3.5 billion was paid out in improper payments representing almost and 11% error rate.   This error rate has reduced from the Recession period which had an error rate of almost 13%.   Because of funding from the government and improvements in UI integrity, many states have reduced their improper payments of benefits.   Although the improper payments are improving, there is obviously more improvements needed.   With unemployment claims low across the nation and improved integrity, many state trust funds have improved.    As stated in our April Newsletter, most states do not have their trust funds to levels that can sustain another recession without once applying for advances under the Title XII loan provision.

Despite the struggles of the UI agencies, it appears the Administration has additional ideas for the use of the unemployment funds.    Trump’s Tax Reform request the UI system to be modified to include up to six weeks of paid leave for mothers to take care of their newborns. The program would allow the new mothers to collect $300 per week for during their leave.  The cost to the UI agencies would be approximately $2.5 billion.  Trump feels the program can be paid for by reducing the $5.6 billion in improper benefit payments as suggested in the 2017 budget for program integrity.

In addition to using UI funds to finance paid maternity leaves, The Presidents’ 2018 budget is proposing grants in the amount of 9.6 Billion for the Department of Labor reflecting a decrease of 2.5 billion from 2017.   The budget calls for improvement with Job Corps by closing centers that are not providing good education and preparing youth for future jobs.   Also proposed is decrease in Federal support for job training and employment service grants shifting the responsibility of the cost for those programs to the states (which would be funded by employers).

Between budget cuts and additional uses of the UI trust funds, how can the state agencies improve their trust funds in order to meet the new standards of solvency with an AHCM of 1.0?   It appears the employers will be paying the tab!   Will employers see increase rates for 2018?  Probably not as UI tends to stay two years behind changes in the economy or in this case the budgets.   Most states will determine the 2018 rate schedules and in some cases the taxable wage base for 2018 but evaluating their trust fund balance as of June 30, 2017.   We will need to wait until after the second quarter contributions and benefit charges are calculated which takes some states until October or November to tally all the numbers.

If you have any questions or concerns, please contact Norma Green, our Tax Director, at (800) 207- 6926, EXT. 418 or ngreen@corporatecostcontrol.com


Guideline: Upcoming CCC Trainings

CCC’s 2017 Training Schedule continues! Join us for one or all.

training

This session reviews why employers can receive claims up to 18 months later and how they are handled. We cover Base Period claims and how they may affect tax-paying and reimbursable employers differently

CCC will host a mock unemployment telephone hearing. This session is 1 hour long to give you an example of our preparation techniques, what an actual hearing is like and finally what a post hearing conference consists of.

This session will review why we have UI Integrity, how it affects the employer and what it means for responding to state unemployment agencies.

This session will define misconduct and help you understand which types of discharges are allowable for unemployment benefits and which are not. We will give you case specific examples.

This session will review why 90 probationary periods are valuable to employers. We will review how different states determine employer liability and how a probationary period can financially impact your organization.

CCC UI University is also adding tax education sessions each quarter. They will be presented by our expert tax departments and will last one hour. Join us for one, more or all!

This webinar will answer all your questions about the basics of unemployment tax. How can I reduce my rates? What is a voluntary contribution? What is a joint account? If I reorganize, does that change my unemployment tax rate? How long does it take one claim to show up on my rate notice?

Our PEO webinar will cover all your questions. What is new with PEO’s? Are many PEO’s qualifying for the Certification? What are the costs associated with the Certification? What does it mean to change ownership or investors to a PEO? How can I control my rates as a PEO?

Our outlook for 2018 will review what occurred in 2017 and it’s impact on 2018. Are the states solvent? Where are we with the Average High Cost Multiple? What is happening to the 2018 Taxable Wage Base for each state? And More!

If you have questions about our trainings, contact CCC info@corporatecostcontrol.com or (800) 207-6926.

Contact CCC to see how we can save your organization time and money. Contact our Sales Team (800) 207-6926

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