By Peter Whoriskey

In Record Numbers, Employers Move to Block Unemployment Payouts

Washington Post Staff Writer
Thursday, February 12, 2009; Page A01

 

It’s hard enough to lose a job. But for a growing proportion of U.S. workers, the troubles really set in when they apply for unemployment benefits.

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More than a quarter of people applying for such claims have their rights to the benefit challenged as employers increasingly act to block payouts to former workers.

The proportion of claims disputed by former employers and state agencies has reached record levels in recent years, according to the Labor Department numbers tallied by the Urban Institute.

Under state and federal laws, employees who are fired for misbehavior or quit voluntarily are ineligible for unemployment compensation. When jobless claims are blocked, employers save money because their unemployment insurance rates are based on the amount of the benefits their workers collect.

As unemployment rolls swell in the recession, many workers seem surprised to find their benefits challenged, their former bosses providing testimony against them. On one recent morning in what amounts to one of Maryland’s unemployment courts, employees and employers squared off at conference tables to rehash reports of bad customer service, anger management and absenteeism.

“I couldn’t believe it,” said Kenneth M. Brown, who lost his job as a hotel electrician in October.

He began collecting benefits of $380 a week but then discovered that his former employer, the owners of the Gaylord National Resort and Convention Center, were appealing to block his unemployment benefits. The hotel alleged that he had been fired for being deceptive with a supervisor.

“A big corporation like that. . . . It was hard enough to be terminated,” he said. “But for them to try to take away the unemployment benefits — I just thought that was heartless.”

 

After a Post reporter turned up at the hearing, the hotel’s representative withdrew the appeal and declined to comment. A hotel spokesperson later said the company does not comment on legal matters. Brown will continue to collect benefits, which he, his wife and three young children rely on to make monthly mortgage payments on their Upper Marlboro home.

Unemployment compensation programs are administered by the states and funded by payroll taxes that employers pay. In 2007, employers put up about $31.5 billion in such taxes, and those taxes typically rise during and after recessions, as states seek to replenish the funds.

With each successful claim raising a company’s costs, many firms resist letting employees collect the benefit if they consider it undeserved.

“In some of these cases, employers feel like there’s some matter of principle involved,” said Coleman Walsh, chief administrative law judge in Virginia, who has handled many such disputes. But, he said, “nowadays it appears their motivation has more to do with the impact on their unemployment insurance tax rate. Employers by and large are more aware of unemployment as a cost of business.”

The cost of unemployment insurance has created an industry of “third-party agents” — companies that specialize in helping employers deal with the unemployment insurance administration. These firms represent employers in disputes with former employees over jobless benefits.

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One of the largest is …., a St. Louis company active in the Washington area, which claims more than 8,000 clients.

The company’s Web site says that it removes “over $6 billion in unemployment claims liability annually.”

Joyce Dear, chief operations officer for tax management services at …., said firms such as hers help bring to light the issues surrounding an employee’s departure.

“You are limited to what is permissible,” she said. “What an employer can do is provide the facts around a separation. The awarding of the benefits is in the hands of the state.”

Wayne Vroman, a researcher at the Urban Institute, has documented the rise of challenges to unemployment claims using the Labor Department data. He found that the proportion of claims challenged on the basis of misconduct has more than doubled, to 16 percent, since the late 1980s. Claims disputed on the grounds that the worker simply quit represent about 10 percent of the otherwise eligible applications.

Even as more employers have alleged employee misconduct, their success rate has stayed relatively stable — they lose on such issues about two-thirds of the time.

“What is clear is that employers have become more willing to contest claims from claimants,” Vroman said of the data.

Hearing officers and others in the industry said it isn’t clear why the number of challenges to unemployment claims has grown. The labor force has changed over the years, with less of it devoted to manufacturing and more of it from the service sector.

Some suggested the rise in disputed benefits stems from the fact that it is easier today for employers to track claims and try to block those they consider unwarranted.

“Automation has contributed to the ease with which protests from the employer can be filed,” said Doug Holmes, president of UWC Strategy, a group that claims large and small employers among its members and represents their interests in unemployment matters.

Others speculated that changes in the law have made it easier for employers to block unemployment claims.

Rick McHugh, a staff attorney for the National Employment Law Project who began handling such cases in the 1970s, said court rulings have slowly enlarged the definition of employee misconduct, making it easier for employers to say they rightfully fired a worker.

“The courts are just not showing as much sympathy for employees who get fired,” he said. “There’s a higher standard of behavior that is expected of employees.”

For example, back in 1941, the Wisconsin Supreme Court considered the case of a cab driver who’d had three accidents in two weeks and also shorted the company on a 40 cent fare, turning in only 25 cents.

The court ruled that the driver was entitled to unemployment benefits because unintentionally careless or shoddy work did not constitute misconduct. It’s unlikely, McHugh said, that the case would be determined the same way today.

In many states, hearings are held daily on unemployment claims. The outcome most often turns on whether the former employee was guilty of misconduct.

With employees and employers as adversaries, it’s often difficult to determine the facts of a case, and just as difficult at times to separate misconduct from incompetence, which is not a reason to withhold the benefits.

During a day of hearings this week in Wheaton, human resources personnel sat across tables from former employees, and the discussion often turned to written warnings, company handbooks and who-told-what-to-whom.

A former assistant manager at Ri Ra, an Irish Bar in Bethesda, fended off complaints that, among other things, he’d failed to greet guests at the door and one time poured a beer for himself after hours.

A Verizon technician was charged with, in company terms, “detour and frolic.”

And a former salesman at Ethan Allen complained that there was no way he could have made his $35,000 sales quota — and that’s why he quit.

“It’s almost like a daily soap opera — but it’s real life,” veteran hearing examiner Scott Karp said. “In this economic climate, the threshold for what employers consider minimum acceptable behavior has changed. They decide they’re not going to put up with it anymore, so they start documenting the employee’s behavior and often enough, the issue winds up here.”

Our Perspective:

Unemployment claims are a much overlooked business expense.

Did you know that Unemployment Tax is the 2nd largest Employer mandated tax?

Basically, the Unemployment Fund can be seen as being a checking account with the state.

The state determines what your rate is.

The rate determines how much money you put into this account to pay claims.

Then the state notifies you how much they have taken out of the account to pay claims.

How do you know these rates are correct?

How do you know your reserves are correct?

How do you know if you are paying the proper amount for each claim?

Many business never ask this question!

This is one of the only employer taxes that you can control!

You could be overpaying unemployment taxes into the fund.

You may be overpaying claims!

You may be paying for claims that are not your responsibility!

We have worked with clients to review their rates and have provided a long term solution to manage their claims. As a result, we have reduced their rates and reduced the contribution they have to annually pay into the unemployment fund.

Would you like to know more, email george@hbsadvantage.com or you may call

856-857-1230.

We have clients who have operations thruout the United States.

We are a boutique firm with success with many high profile clients.

Visit us on the web to learn more

www.hutchinsonbusinesssolutions.com

Caught by the tale!

April 30, 2008

 

As reported today in Bloomberg.com

The Federal Reserve lowered the benchmark U.S. interest rate by a quarter point to 2 percent and indicated it’s ready to pause after seven cuts since September.

“The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time,” the Federal Open Market Committee said in a statement after meeting today in Washington. The central bank also warned that “some indicators of inflation expectations have risen in recent months.”

Chairman Ben S. Bernanke and his colleagues dropped a reference to “downside risks” to the economy, while acknowledging the damage that the housing slump has wrought on the six-year expansion. Stocks surrendered gains on speculation the most aggressive monetary-policy easing in two decades is approaching an end.

“We do not expect to see a rate cut at the next few meetings without a substantial contraction of the economy,” said Christopher Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “We are not yet to Memorial Day weekend, but the Fed effectively told us today to take the summer off.”

Inflation Outlook

Oil prices reached another record high of $119.93 a barrel on April 28. The Fed said indicators of inflation expectations have risen.

“The committee expects inflation to moderate in coming quarters, reflecting the projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization,” the Fed added. “It will be necessary to continue to monitor inflation developments carefully,” the Fed said.

At the same time, the economy is faltering. Hours before the Fed decision, the Commerce Department reported that gross domestic product increased at an annual pace of 0.6 percent last quarter. Spending by households, the biggest part of the economy, grew at the slowest pace since 2001, when the U.S. economy was in a recession.

Our Perspective:

Where is the reality check for middle America?

Now the Fed is worrying about inflation. Food and gas prices have risen sharply! This is making it very difficult for families to keep up.

Where will we find relief?

It is getting more difficult to meet monthly expenses, let alone trying to add to our savings account.

Small and medium size businesses are caught in the crunch.

Should you find yourself dealing with these tighter dollar issues, give us a call. We are working with companies creating opportunities to lower cost. There are still many opportunities to find savings.

Don’t be complaisant! Be Proactive!

We are here to serve. Contact george@hbsadvantage.com

Visit our website www.hutchinsonbusinesssolutions.com to learn about opportunities available to reduce cost and provide savings for your company.

Americans are more dissatisfied with the country’s direction than at any time since the New York Times/CBS News began asking about the subject in the early 1990s, according to the latest poll.

In the poll, 81 percent of respondents said they believed that “things have pretty seriously gotten off on the wrong track,” up from 69 percent a year ago and 35 percent in early 2003.

Although the public mood has been darkening since the early days of the war in Iraq, it has taken a new turn for the worse in the last few months, as the economy has seemed to slip into recession. There is now nearly a national consensus that the country faces significant problems.

A majority of nearly every demographic and political group — Democrats and Republicans, men and women, residents of cities and rural areas, college graduates and those who finished only high school — say that the United States is headed in the wrong direction. Seventy-eight percent of respondents said the country was worse off than five years ago; just 4 percent said it was better off.

The dissatisfaction is especially striking because public opinion usually hits its low point only in the months and years after an economic downturn, not at the beginning of one. Today, however, Americans report being deeply worried about the country even though many say their own personal finances are still in fairly good shape.

Only 21 percent of respondents said that the overall economy was in good condition, the lowest such number since late 1992, when the recession that began in the summer of 1990 had already been over for more than a year. In the latest poll, nearly two in three people said they believed the economy was in recession today.

Our Perspective

Are you better off than you were 4 years ago?

I seem to remember that question being asked in a previous presidential election.

How come nobody is asking the same question now?

It’s the economy stupid!  We all heard that one too! 

We are all caught up in the upcoming election but the focus seems to be on “he said …she said.” 

There are real issues with the economy: 

  • Employers slashed 80,000 jobs in March, the most in five years and the third straight month of losses.
  • At the same time, the national unemployment rate rose from 4.8 percent to 5.1 percent, the clearest signal yet that the economy might already be srinking.
  • Fed Chairman Bernanke told the Joint Economic Committee on April 2nd that declining home prices are “at the core” of the credit crunch. Falling employment, rising energy costs, and depreciating housing wealth are also undercutting consumer spending.

This is a perfect opportunity to make our voices heard. There is an election in November.

Know the issues.

Know how each candidate stands on the issues.

Encourage everyone to get out and vote.

Our silence has brought us to where we currently are. We always thought that our elected officials would do what is best for all. Somehow they missed the point!

Moving from the Big Picture, what steps are you taking?

What are you doing to bring about stability in our little world?

These are issues we deal with all the time.

What is your unemployment rate?

How much sales tax did you pay last year?

Are you paying for services that you don’t even have?

Our clients are asking these questions!

They are finding savings and refund opportunities.  

Let us know your thoughts?

Do you have a question?

You may email george@hbsadvantage.com

Hutchinson Business Solutions ……Your CFO on the Go.  

Creating Opportunities Today,…Defining Savings for Tomorrow.

Visit http://www.hutchinsonbusinesssolutions.com/ to learn more about saving opportunities available for your company. 

Spread the good news….. share this information with a friend.    

  

        Many corporations view sales tax as just another cost of doing business. We would like to take a moment to review why it is important that companies review their procedure for paying sales tax.

 Here are a few questions to think about:

·        Do you know how much sales / use tax your company pays every year?

·        Does your company have a sales tax procedure in place?

·        Are these procedures being followed?

·        How much training has been given to the people responsible for accruing use tax?

·        Has there been frequent turnover in the position that handles this responsibility? 

Recently we spoke to a potential client who stated that over the last 3 years they had invested from  $250m upto $280m in capital improvements in their facilities. During this process either the owner or a subcontractor is purchasing material for specific improvements. Taxes may be paid for an item at the time of purchase however the ultimate test for tax is how is the item being used.  

 We have one client who was purchasing granite counter tops. The subcontractor was paying the tax on the granite tops and passing the tax onto our client thru a stipulated contract. Our audit defined that the granite counter tops were being installed into each unit thus becoming real property, which would make the purchase tax exempt.

These factors, and many others, contribute to why so many companies are paying more use and sales tax than they should.   

Part of an audit procedure should be looking at the entire operation within your company and how it is broken down into independent operating divisions. Each operation should be treated as a separate entity and determine the tax implications for each of their purchases.

It is also important to look at both sides of the equation. The state will come in and do an exposure audit. Is your company not paying tax on purchases that should be taxable. 

We not only look at that aspect but also determine if you are paying taxes on purchases that are actually tax exempt.  

Tax laws are complicated. Our staff is comprised of former state auditors who are familiar with the the tax codes in multiple sates.

In these difficult budget times, most states are running at a deficit and are becoming more aggressive at bringing in additional revenue. Don’t expect them to tell you if your company has overpaid its use and sales tax!

The onus is on you!

Do you feel that you may be overpaying Sales Tax?

For your own protection, you need someone who has your company’s best interest at heart.

Our clients are receiving significant refunds for overpayment of sales tax.

Let us know your thoughts?

You may email george@hbsadvantage.com

Hutchinson Business Solutions ……Your CFO on the Go.  

Creating Opportunities Today,…Defining Savings for Tomorrow.

Visit http://www.hutchinsonbusinesssolutions.com/ to learn more about saving opportunities available for your company.

Spread the good news….. share this information with a friend.  

U.S. Initial Jobless Claims Rose 22,000 to 378,000  

As reported in Bloomberg .com

March 20 (Bloomberg) — The number of Americans filing first-time claims for unemployment insurance rose last week and the total number on benefit rolls reached the highest since August 2004, signs that firings are increasing.

Initial claims for benefits increased 22,000 to 378,000 in the week ended March 15, more than economists forecast and the highest since the week of Jan. 26, from 356,000 the prior week, the Labor Department said in Washington. The number of people staying on benefits rose to 2.865 million from 2.833 million.

U.S. companies are cutting staff as the biggest housing slump in a quarter century, tighter credit and mounting financial losses push the economy toward a recession. The Federal Reserve, noting labor markets had “softened” as it cut interest rates earlier this week, said it would act “as needed” to promote growth.

“This is pretty much what it looks like heading into recession,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi in New York, said in an interview with Bloomberg Television. “It’s a bad number for the Fed. This is something that might keep them cutting rates.”

Treasuries were little changed after the report, with the benchmark 10-year note yielding 3.33 percent.

Weekly claims were forecast to rise to 360,000 from 353,000 initially reported in the prior week, according to the median projection of 39 economists in a Bloomberg News survey. Estimates ranged from 345,000 to 380,000.

From a company’s perspective

Many companies look to firing or laying off employees to address a downfall in the economy. This may address an immediate need but many fail to realize that this decision lives with them for 4 years.

First, if an employee collects, the payments will be paid out of the State mandated company’s account. The state unemployment programs are set up to mirror that each company has their own checking account.

The state assigns a rate that tells you how much will be put into the account and then notifies you how much has been paid out in claims.

The amount paid out directly affects the balance or reserves held in the account and have a direct relationship in determining what your rate will be over the next 4 years. The state makes a calculation based on the dollar amount of claims paid out, the reserves needed to support future claims as they relate to the taxable wage base.

 Confused yet?

That is the way the states want you to view it.

Should you have any questions about the unemployment or claim process, feel free to contact us. We deal with these issues on a daily basis.

george@hbsadvantage.com

We find many clients have been assigned the wrong rate and our overpaying unemployment taxes.

To learn more visit our website.

www.hbsadvantage.com

We look forward to discussing this with you.

Please take a moment to review of our recent Unemployment Tax successes.

These results may also await you? 

Recalculated Unemployment Tax rates in 2 states and provided over $500k refund.

This issue simmered for 2 years until HBS got involved and clarified.

Major PA Company doing business in the Tri-State has grown thru acquisition. The States of NJ & PA had made an error in recording these transactions. HBS was able to define these issues and get the both States to accept our audit results. Both states have   corrected the assigned rates and are issuing over $500k in refunds.

  

Found $24m error on companies Unemployment average taxable wage base, lowered tax rate and saved client $425k in tax liability over the next year.

Major PA Facility doing business in multiple states had grown thru acquisitions. An error was found on their NJ taxable wage base calculation. The State was notified and the rate was corrected producing a $425k savings in this years unemployment tax payments.

Provided $19k Unemployment Tax Saving.Taking proactive steps to lower rates and provide savings.

Major New Jersey Law Firm received their new Unemployment rates from the State in August. While reviewing the company’s reserve balance, we found that by making a $6k voluntary contribution to increase the reserve balance their tax rate would lowered by .3%. By being proactive and the client will save $25k in unemployment taxes over the next year.

Give us a call to learn more about how these opportunities may also be available to your company.

Hutchinson Business Solutions has a 90% success rate in saving our clients tax liability and providing refunds.

What’s it worth?

January 11, 2008

Just in the last week, firms operating in Pennsylvania received their new Unemployment Tax Rate notices in the mail…….. Happy New Year!

 What is your new rate? 

Many people don’t realize it but Unemployment is the 2nd highest employer mandated tax.

Mistakenly, it is taken as just another cost of doing business.

 The whole Unemployment process can be likened to having a checkbook with the State.

  • The State tells you what your rate is.
  • The State tells you how much money you should be depositing in this account over the next year.
  • The State tells you how much they have taken out of your account to pay claims.

 Who is holding the State accountable that the rate is correct?

 Who is holding the state accountable that the claim amount taken from your account is correct? 

That is what we do!

The national average for overpaying Unemployment Claims is 9.5%, in some states it is over 25%.

Maybe this is something you should be keeping an eye on?

This is just not another cost of doing business. 

Did your rate increase?

I was speaking to a prospective client the other morning. They told me their Unemployment rate went up 2%. Doesn’t sound like much?

Well 2% to this small company means an additional $24,000 in Unemployment taxes for the next year.

How much additional revenue will be needed to cover this cost?

Stop the runaway train! Start asking questions!

Is your current unemployment rate correct?

Why not ask us?

We will do a no cost analysis of your current rate.

We have a 90% success rate reducing unemployment cost and getting refunds for overpayments.

 You may fax your current rate notice to our office 856-857-1233 for a no cost analysis of your current rate. 

Call 856-857-1230 or email us george@hbsadvantage.com to discuss your current unemployment rate. 

Hutchinson Business Solutions…Your Business Tax Advocate.

Our clients do not overpay taxes!

92% of Americans say

January 7, 2008

92% of Americans Polled say they are Happy?

Turn on the TV you are bombarded.

The presidential election has been going on for almost 2 years now. Each day we are given a new up to the minute poll to digest. Who’s in the lead? Who said what?

Information overload!!! Are we able to choose for ourselves or are we told who to vote for?

Gold hits a record high, Oil prices continue to climb, Gas has settled around $3.00.

Housing prices have dropped over 20%, Mortgage defaults are at a record high, It’s getting harder to get a mortgage:

Yet 92% of Americans polled said they are Happy!!!!!

What’s in the water???

Don’t ask!!

The great China trial is over….lead paint!

The Middle East continues to crumble….

The people in Dafur are starving.

Kenya is rioting.

Yet 92% of Americans polled said they are Happy!!!!!Did anyone ask you?I must admit I am Happy. But most of all I am thankful.

Thankful that everyday we are given the opportunity to choose.

It is still not a perfect world but we have learned to live with its brokenness and still be happy.

Have you had enough?

Want some good news for a change?

Hutchinson Business Solutions has a 90% success rate providing refunds and savings for our clients.

Give us a call.

We can make your day! 856-857-1230

Visit http://www.hutchinsonbusinesssolutions.com/ to learn more about saving opportunities available for your company.

Did You Know?

December 13, 2007

Why you should look at Unemployment Taxes 

Unemployment is the 2nd  highest employer mandated tax

Your Unemployment account is similar to having an open checkbook with the State:

  •  
    • The State assigns your rates

    • The State has total control of all monies in the account

    • The State determines the amount of each payment and disburses payments from this account 
    • The State sends a quarterly reconciliation of all activity in the account

 Would you handle your personal account this way? 

Did You Know:  

  • The State of New Jersey has a 10% error rate in the payment of unemployment claims.

Are you overpaying unemployment taxes? 

A 10% error rate!!! 

What is your rate?  

Is it over 1%? 

What are you doing to manage these payments? 

We offer a service to manage your account and audit every claim:

  •  
    • Is the claim legitimate?
    • Is the state paying the proper amount?
    • Are you 100% responsible?

We help our clients to be proactive and drive their rates down!! 

Hutchinson Business Solutions ( HBS ) works as an advocate for our clients.  

Call 856-857-1230 to learn more about our unemployment tax service. You may email questions to george@hbsadvantage.com 

Hutchinson Business Solutions……………..Your CFO on the Go. 

Defining Opportunities Today,…Providing Savings for Tomorrow.

Visit http://www.hutchinsonbusinesssolutions.com/ to learn more about saving opportunities available for your company.

Where did my day go?

November 16, 2007

 

Where did the day go? I had a whole list of things I wanted to get done but that went out the window as soon as I walked in this morning.

 

 

Sound familiar! Are you running your day or the day running you?

 Ever think of outsourcing? 

Companies have come to realize that outsourcing is a fairly powerful and effective management tool. It allows you to address an issue, provide a solution; increase efficiencies and profits while keeping your pulse on daily activities that demand your attention.

 

 

When a company approaches outsourcing for the first time the most challenging question is the most basic one:

 

Where do we begin?

 

 

 

 

A recent executive forum favored starting with generic, transaction based business processes such as finance, accounting and information technology. They felt that these fields offer quick wins, attractive returns with relatively low levels of risk.

Hutchinson Business Solutions….Your Outsource Solution

Today it is more important than ever to take an objective look at your operating expenses.

 

Below are areas with great opportunities for savings.

  • Payroll Taxes – There is a 50% chance you are overpaying payroll taxes.
  • Sales Tax – Long thought to be the “cost of doing business.”
  • Telecom – Clients are saving from 10 % to 40%.
  • Fleet Management – You can now “put your fleet in the palm of your hand.”
  • Data Solutions – Ask about our Virtual CIO Managed Service Program.
  • Utilities – Deregulated savings for large volume users.
  • Insurance – Cost continue to trend from 10% to 20% a year.

Many clients are enjoying the savings and have received refunds for overpayments.

A new global study on business outsourcing relationships finds that:

·        74% use “business outcomes” to measure performance

·        61% say outsourcing helps their companies perform better

·        74% are satisfied with their outsourcing experience

Thinking of outsourcing? Call 856-857-1230 or email george@hbsadvantage.com to discuss what opportunities are available. 

Hutchinson Businees Solutions…Your CFO on the Go

Defining opportunities today, increasing profits for tomorrow.