Firing Employees Will Increase Your Unemployment Insurance Tax Rate
Firing Employees – Effects On Tax Rate
Running a successful business can be challenging. What makes it even harder is when you make the decision to start firing employees who are not performing up to par. Not only does this event initiate an unemployment claim, but it will also impact your state’s unemployment insurance tax rate, and therefore, overall unemployment costs.
Employers support the unemployment insurance process by paying into state and federal taxes. The tax rate is determined by how many unemployment insurance claims are created in that state. The amount the employer has paid into the system is also a factor as well.
If your company begins firing employees, a tax-rate increase accrues, depending on the circumstances associated with the firing. It also is predicated on how well you have documented your actions and your rationale for termination.
An employee is most always eligible for unemployment insurance benefits if they have been fired due to no fault of their own, but they would most likely not be eligible if they could have prevented the termination.
Facing an unemployment claim should not stop you from firing someone who should be fired. Although the claim may raise your tax rates, you should not have to keep an employee who is not performing up to your expectations.
UI claims are bound to happen at some point in the lifespan of your business. Dealing with the paperwork and meeting the deadlines can be challenging. To eliminate errors and fines from the state when firing employees, it’s wise to hire a third-party expert to ensure the claim process runs smoothly.