Employers are financially responsible for the unemployment benefits paid to the unemployed since each state taxes its employers for the unemployment benefits it pays. Awarded unemployment claims cause a company’s unemployment tax rate to rise. This tax rate is experience rated – it goes up or down over time depending on companies’ history with number of awarded unemployment claims.
Majority of employers consider unemployment taxes as a cost of doing business. They do not realize that many of their former employees may not be eligible for unemployment benefits. They also fail to comprehend that they can fight many unemployment claims.
If employers fail to respond to unemployment claims, their tax amount will increase. However, employers can receive and respond to unemployment insurance claims online. Thus, they can save time, money and potential increases of tax amount. Unemployment Insurance (UI) SIDES is a web based system that allows electronic transmission of information requests from UI agencies to employers and/or Third Party Administrators (TPAs), as well as transmission of replies containing the requested information back to the UI agencies.
What Is UI SIDES
Responding to paper-based unemployment insurance information requests fully and within tight state deadlines creates a significant and costly administrative burden on companies, potentially affecting the bottom line.
This problem is even greater for employers and third-party administrators with operations in multiple states, since there used to be no single national standard to help states and employers exchange key information about UI claims.
The National Association of State Workforce Agencies’ (NASWA) State Information Data Exchange System (SIDES) and SIDES E-Response is the result of a strategic partnership between the U.S. Department of Labor (USDOL) and state UI agencies. This allows employers and TPAs to use a secure, electronic and nationally-standardized format in which they can easily respond to UI information requests, attach documentation when needed and receive a date-stamped confirmation of receipt.
Errors such as incorrect addresses, lost mail or delays can result in employers paying more unemployment insurance than they should be responsible for ang can be avoided by using UI SIDES. Also, employers are notified faster than the traditional mailing method, and notifications sent through SIDES E-Response include questions necessary for adjudicating each claim.Find out how to reduce unemployment tax expenses while improving handling of unemployment claims with this detailed guide on UI compliance.
How UI SIDES and SIDES E-Response Work
When a person files a claim for unemployment, state labor department sends a letter to the employer or third-party administrators verifying the reason the claimant has given for separation and providing login information to SIDES E-Response. The employer responds electronically with SIDES E-Response, which was previously accomplished by mail or fax. This is how employers save time and money exchanging unemployment information by reducing paper handling, postage costs, follow-up requests, and phone calls.
As a safe and secure program, UI SIDES and SIDES E-Response helps employers ensure information exchanges are complete. Additionally, it reduces improper payments and unnecessary employer charges.
Common Causes of UI Overpayments
A UI overpayment occurs when unemployment insurance benefits are paid to a claimant who is later determined not to have been eligible or entitled to those benefits. The two largest causes of UI overpayments are incorrect initial eligibility decisions and working while receiving UI benefits. Many UI overpayments, which could be prevented by receiving timely and accurate information, negatively impact employers’ bottom lines.
Other common causes of overpayments include:
- Reversing decision on a previous allowance of UI benefits to a claimant by a state labor department;
- Failing to disclose that the claimant received wages, holiday, vacation pay, severance pay or other deductible pay after a job separation;
- Claimant failing to accurately report earnings and hours worked while filing for UI benefits;
- Changes of claimant’s weekly and/or maximum UI benefit amount because the wage information was incorrect when the claim was initially filed;
- Disqualifying claimant from receiving UI benefits due to being responsible for their job separation; or
- Claimant failing to notify a state labor department that he or she does not meet the eligibility requirements.
Reducing UI Costs with UI SIDES and SIDES E-Response
In addition to offering significant administrative cost savings, both UI SIDES and SIDES E-Response address two of the largest causes of UI overpayments: incorrect eligibility information related to job separation issues and working while receiving UI benefits. UI overpayments negatively impact employers’ bottom lines. However, many overpayments can be prevented by receiving timely and accurate information using UI SIDES or SIDES E-Response.
Additional UI SIDES and SIDES E-Response benefits for employers:
- UI SIDES and SIDES E-Response is a nationally standardized format for unemployment insurance information requests;
- Data checks ensure the exchange of complete and valid information;
- Requests for information arrive faster, meaning that employers can respond faster;
- Confirmation receipts are emailed as proof that a timely reply was processed;
- Staff productivity improves with fewer follow-up phone calls and less correspondence;
- Delays related to paper mail delivery are eliminated;
- Fraud detection is improved to reduce the amount of improper payments; and
- The number of appeals you are required to attend is reduced.
Upgrading Unemployment Claims Management
There are many proactive measures that employers can take to keep unemployment costs low. To begin with, employers need to hire only workers who are needed and qualified to prevent layoffs and situations where an employee is not a good fit. It is also advisable to document everything and provide specific, actionable feedback to give employees opportunities to correct problems. In addition to this, automated unemployment claim management enables organizations to process claims accurately, consistently and quickly. This, in combination with UI SIDES and SIDES E-Response, allows companies to dramatically improve the efficiency of the processes, achieve significant cost savings, prevent improper payments, and keep UI tax rates as low as possible.Outsource unemployment claims management and minimize inaccuracies and delays in submitting unemployment information while significantly improving overall efficiency.