Unemployment Compensation Program

Carol Gabrielsen Unemployment Consultants, Inc. Phone: 847-670-0590 Fax: 847-670-0596 Email: uctaxes@aol.com

Members of the PDRMA Property/Casualty Program are automatically members of the Unemployment Compensation Program as well.

Added in 2001, this program provides PDRMA members with access to cost control services provided by outside consultants specializing in unemployment claims. It also coordinates the handling of unemployment issues with the other PDRMA coverages.

Provided at no additional cost to the PDRMA member, the Unemployment Compensation Program includes the following services:

• Evaluation of current state funding method. If applicable, audit of tax rate as assigned by the state
  
• Analysis of personnel policies and forms as they affect unemployment insurance
  
• Education of supervisors and other designated employees on unemployment issues. Areas include hiring, warning, suspension, or discharging an employee; handling voluntary quit situations; individuals on leave of absence; offers of work made to prior employees; and cutbacks in staffing.
  
• Audit of claims; with attention to eligibility, benefit period, benefits paid, and benefit charges to the employers account
  
• Investigation, protest and follow-up on all claims
  
• Representation at all unemployment hearings
  
• Processing of claims to their final disposition, up to and including the board of review
  
• Updates on unemployment law changes
  
• Preparation of claims activity reports
  
• Periodic visits to review and discuss matters pertinent to the proper maintenance of an unemployment control program
  
• Consultation with employers on specific problems to ensure that proper documentation is prepared to assist in securing disqualification of unemployment insurance benefits
  

Savings

The savings afforded members through the use of the Unemployment Compensation program can come from three different sources:

1)	If applicable, a member may save the difference between the unemployment compensation tax as a fixed percentage of payroll and the cost of their actual claims.
2)	Using the services of an unemployment consultant to implement risk management techniques, assist in handling employment situations, and represent the member agency at unemployment hearings can protect members from paying unnecessary claims.
3)	Coordinating the handling of employment situations may prevent employment practices liability exposures.

Public entities in Illinois are able to select whether to pay a tax on the first $9,000 of every employee’s salary or to reimburse the state for actual claims incurred. The following illustrates how these two methods compare.

Illustration

To demonstrate the wide variance in cost, Agency A below is a large agency that operates two golf courses, six separate aquatic facilities and employs 97 full-time, 160 part-time and 840 seasonal employees. It retains the services of a company to manage its unemployment compensation exposure and it pays the costs on a reimbursement basis to the State of Illinois. It must be said that the $220 paid in the sample year was the lowest of the previous three years; the two previous years were $753 and $2,025 respectively. However, this was still very impressive considering the number of employees.

Agency B below is comparable to Agency A with 102 full-time, 75 part-time and 348 seasonal employees. This agency operates five golf courses and two separate aquatic facilities. It does not use a company to manage its unemployment exposure and pays the unemployment tax to the State of Illinois at a rate of 3.4%. This Agency’s costs are at the other end of the spectrum. In the sample year, the State paid claims on their behalf of $54,782 and the total tax paid to the State was $83,791.

Obviously, this agency would have been significantly better off financially if they had elected the reimbursement basis.

This is just one example of the financial benefits that can be derived from managing PDRMA members’ exposure to unemployment compensation liability in the same manner that the exposure to other financial risks is managed.