This is a guest post written for Maryland Chamber members by Ron Adler, President and CEO of Laurdan Associates and Chair of the Maryland Chamber Unemployement Insurance Subcommittee. For more information, contact Ronald Adler, president-CEO, Laurdan Associates, Inc. at (301) 299-4117 or radler@laurdan.com.
Maryland employers will soon receive their 2011 unemployment insurance (UI) tax rate notices. Once again tax rates will range from 2.2% ($187 per employee) to 13.5% ($1,147.50 per employee). The 2011 new employer rate—except for new construction employers headquartered in another state who will be assigned a rate of 13.3%–will be 2.6%. NOTE: Employers who want information about their tax rate before the receipt of their tax rate notice may call 1-800-492-5524 and enter “16.”
While there will be no change in the 2011 tax rate or the per employee tax liability for employers that continued to be assigned either the minimum or maximum tax rates, most other Maryland employers are likely to experience significantly higher tax rates as the full effect of the recession impacts tax rate calculations. NOTE: For small and medium employers, two or three UI claims can increase tax liability by more than 200 percent.
With less than seven months remaining to influence their 2012 tax rates, employers need to review management activities to ensure the effectiveness of their UI cost controls. Four specific areas should be addressed.
1) Job descriptions and performance. In response to the recession, organizations have redefined their business objectives and goals, reengineered their workplace, downsized, and introduced new technology and methods. This has changed how jobs are performed and the required performance standards. Your organization should ensure that its job descriptions and performance standards reflect current jobs, not the jobs that used to be performed, and ensure that this new information is used in hiring decisions. Remember liability for UI claims starts at the time of hire—not when the employee is fired. If you hire an employee, who is unable to perform the job or does not meet your performance standards and you terminate that employee, your account will be charged for any benefits collected.
2) Performance management. Performance management plays a critical role in helping organizations achieve their business objectives. More than a just a scorecard of how well employees are performing their jobs, effective performance management is about taking action. Your performance management program should work with top performers on the steps they should take to move the next level in the organization or become more valuable asset, and it should provide poor performers with an action plan to improve their performance and meet your standards. Since the longer a new employee works for your organization the greater your potential liability for UI benefit charges, the more effective your performance management system is in identifying unsatisfactory performance and conduct and in either helping the employee succeed in his/her job or in helping you make the determination to separate the employee, the lower your potential UI liability.
3) Effective communication with DLLR. Employers frequently complain about claimants that have refused a job offer or have returned to work but are still collecting UI benefits. Employers are right, claimants that refuse a suitable job offer or return to work should be disqualified or denied benefits. Unfortunately some of these same employers fail to communicate this information to the Maryland Department of Labor, Licensing and Regulation (DLLR). If as employers we want to strengthen benefit integrity and reduce to amount of erroneous benefits, we have to be more active in communication with DLLR. If you know or suspect that a claimant is erroneously collecting UI benefits, contact DLLR. NOTE: DLLR is currently working with the Maryland Chamber and other stakeholders to enhance employer-DLLR communications. More information on benefit integrity issues is forthcoming.
4) Engagement. For a number of reasons, including the use UI third party administrators, employers have become disengaged from both the process and the results of UI cost management. While UI TPAs can provide cost-effective expertise in UI cost control, organizations should not abdicate control or responsibility. If your organization uses a UI TPA, it should develop performance standards against which the TPA’s performance will be measured
For more information or for assistance in assessing your organization’s 2011 tax rates or in developing effecting UI cost controls, please contact Ronald Adler, President-CEO, Laurdan Associates, Inc. 301.299.4117, radler@laurdan.com.
