Incorrect payments of unemployment insurance (UI) benefits can be costly for your business. Overpayment of benefits can be charged to your account and alter your UI reserve, requiring a larger tax rate in a subsequent year. However, you can avoid this by paying attention to the Unemployment Insurance notifications from your state agency and replying to them rapidly.
Incorrect payments of UI benefits happen when someone (employer or former employee) provides the wrong information or neglects to provide the information on time. When this occurs, former employees might collect benefits that they should not receive. There are a few ways that this is preventable:
- When a worker leaves your company, give complete and accurate information regarding the separation. This can help forestall over payments and can save you from going through the appeals procedure.
- Respond quickly to requests for proof of the employee’s weekly pay amount.
- Report new hires to state agencies within the required number of days (usually 10-20) to prevent collecting benefits while working.
If employees receive more UI benefits than they should, the money must be repaid, and there may be penalties and fines. Also, they could lose future eligibility to receive benefits and in some cases, go to prison. If the money is not repaid, it can be withheld from their state and federal income tax refunds, or garnished from future paychecks.
Employers can face serious penalties for not complying with UI laws. Failing to make proper tax payments will result in interest and fines plus the tax due. It’s imperative to pay taxes when due to avoid these penalties
If you need more information on this topic, check your state agency’s website, or contact us at 310-534-5577.
Employers don’t get a bill per se, their rate increases for the next calendar year instead. Say “and alter your UI reserve, requiring a larger tax rate in a subsequent year.”
