www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO Condition of UI: National Focus
www.employmenttax.com Phone: +1(800) 518-3874 | email:
[email protected] Join ETS Many States UI Reserves Still
Insolvent Red = borrowing as of 8/30/13. Yellow = less than 6 mos.
of positive balances. Green = more than 6 mos. of benefits. Orange=
ER-financed bond State Trust Fund Solvency as of August 2013. Map
taken from August 2013 SUCAP Report, based on US DOL UI data
quarterly summary charts & SUCAP Reports.
Slide 7
www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO Condition of the UI System
www.employmenttax.com Phone: +1(800) 518-3874 | email:
[email protected] Join ETS Taxable wage bases &/or UI tax
rates continue to increase. National unemployment rate: 7.3%
(August 2013, BLS)BLS National average cost per UI claim: roughly
$7,703 (DOL). Assessments to UI rates Bond expense, etc. States
using employer-financed bonds: CO, ID, IL, MI, PA, TX New
legislation & enforcement for UI integrity. FUTA Credit
Reduction for 19 states (2012 tax year). See states.See states
Slide 8
www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO UI System Outdated & Flawed
www.employmenttax.com Phone: +1(800) 518-3874 | email:
[email protected] Join ETS Agency error and overcharging
Employer (ER) accounts estimated at ~10-15%. Federal Sequester
raises risk of improper accounting of benefit payments. History of
ER and Employee (EE) abuse of the system (SUTA Dumping, excess
collection). ER & Third Party Administrator (TPA) problems with
untimely or inadequate responses for claim info. Inefficient
communication & data exchange. Image credit:
cassettescassettes
Slide 9
www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO UI System Outdated & Flawed
www.employmenttax.com Phone: +1(800) 518-3874 | email:
[email protected] Join ETS Agency error and overcharging
Employer (ER) accounts estimated at ~10-15%. - Fed Sequester
accounting challenges. - UI Agency IT system challenges (CA, MA
etc.) History of ER and Employee (EE) abuse of the system (SUTA
Dumping, excess collection). ER & Third Party Administrator
(TPA) problems with untimely or inadequate responses for claim
info. Inefficient communication & data exchange. 8 Track Image
Credit: Phillip PessarPhillip Pessar
Slide 10
www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO Immediate Impetus: Financial Conditions
& Systemic Abuse www.employmenttax.com Phone: +1(800) 518-3874
| email: [email protected] Join ETS In 2011, the DOL estimated
$14B, or 11% of all UI claim payouts, result from overpayments. UI
named a high-error program. DOL estimates 19% of UI benefit
overpayments stem from employers' untimely response and/or
inaccurate information. States like IN, LA, AZ, CO, VA pegged with
19-43% improper payment rates. Economic conditions since 08 have
spiked jobless claims, drained states UI reserves, triggered Fed
loans to states to cover UI costs. Growing U.S. deficit/political
pressure to reign in budget.
www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO Spotlight On: UI Overpayment 2012
estimated UI improper payments in CA $403M Agency role in
overpayment error, July 2009 June 2012 26.62 % Employer role in
overpayment error, July 2009 June 2012 19.87% www.employmenttax.com
Phone: +1(800) 518-3874 | email: [email protected] Join ETS
Data retrieved from DOLs UI Improper Payment by StateDOL Role in
error = part or whole responsibility, calculated as % of total UI
claims dollars overpaid in CA California as an Example
www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO Key Federal UI Legislation
www.employmenttax.com Phone: +1(800) 518-3874 | email:
[email protected] Join ETS 2004 SUTA Dumping Act 2011 TAAE UI
Integrity (Sec. 252) 2012 ATRA o EE SS tax return o WOTC
reauthorized
Slide 15
www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO 2004 State Unemployment Tax SUTA Dumping
Prevention Act www.employmenttax.com Phone: +1(800) 518-3874 |
email: [email protected] Join ETS SUTA Dumping (a.k.a.
unemployment tax avoidance) occurs by shifting EEs to a less-taxed
entity to avoid paying a higher UI tax rate. Migration of EEs
between legal entities (M&A, consolidation, etc.) may trigger
time-sensitive mandatory compliance reporting often missed!
Penalties for missing or incorrect reporting can include max UI
ratings; civil &/or criminal penalties. Read Employers M&A
To Do List.Employers M&A To Do List
Slide 16
www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO 2012 ATRA (American Taxpayer Relief Act )
www.employmenttax.com Phone: +1(800) 518-3874 | email:
[email protected] Join ETS EE SS tax rates return to 6.2% in
2013 from 4.2% in 2012 (i.e., 2% FICA payroll tax cut "payroll
holiday" not extended). SS taxable wage limit up to $113,700 in
2013 (from $110,100 in 2012). Extension of Emergency Unemployment
Compensation ("EUC"). Temp. extension of 100% federal reimbursement
for states triggering on regular extended benefits ("EB").
Extension of over 30 business credits, including: R&D, WOTC,
EZ
Slide 17
www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO 2011 Federal TAAEA Law: Sec. 252/UI
Integrity www.employmenttax.com Phone: +1(800) 518-3874 | email:
[email protected] Join ETS Follow-on to 2009 Executive Order
13520 to reduce improper UI payments. Under TAAEAs Sec. 252, states
must not relieve ERs of charges when they fail to respond timely or
adequately to agency request for info. States to develop their own
definitions for pattern of failure (some states also defining
non-timely response). All states to enact UI Integrity legislation
by 10/22/13.
Slide 18
www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO UI Integrity: Sec. 252 Points
www.employmenttax.com Phone: +1(800) 518-3874 | email:
[email protected] Join ETS Also provides ERs cannot collude
with EE to misuse UC system. ERs and TPAs with established pattern
of non-timely response penalized more, but pattern can be as little
as two instances! ERs may be held responsible for inaction and
timeliness (or lack thereof) on the part of their TPAs. Fault means
in part or in whole.
Slide 19
www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO State Legislation Snapshot
www.employmenttax.com Phone: +1(800) 518-3874 | email:
[email protected] Join ETS Some State Legislation Goes Beyond
the Federal Requirement: HI and CT legislation prohibits relief
from charges after just one occurrence of late or inadequate
response. IDs legislation prohibits relief after two occurrences.
VA law widens scope of timeframe; pattern = 4 occurrences in 4
years. Download ETS: Section 252 Employer Fact Sheet here.here UI
Integrity Law Compliance Tips here.here
Slide 20
www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO Pattern of Failure" Defined (Examples)
www.employmenttax.com Phone: +1(800) 518-3874 | email:
[email protected] Join ETS StateEnacted DateEffective
DatePattern of Failure = WA5/8/1310/20/13Greater of 3 or more
offenses in 2 years or 2% of total current claims.
WV4/2/127/1/12Not defined WY3/13/137/1/13Greater of 2 or more
offenses or 2% during the four most recent completed calendar
quarters prior to current request MAPrior to TAAEA(in effect)First
offense NC2/19/1310/21/132% during the past year SC6/7/1310/21/133
or more offenses OR 3% of agency requests within a year, whichever
is greater.
Slide 21
www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO Financial Impact Example
www.employmenttax.com Phone: +1(800) 518-3874 | email:
[email protected] Join ETS Case Study: ER With 100
Separations/Yr; Classified with Pattern of Failure. Benefit$ paid
to claimant prior to successful Appeal by ER. FACTORSFIGURES Weekly
benefit amountAssume $300 Time to appeal8 weeks # of claims lost on
initial determination & won by ER on Appeal 10 (out of 100
total separations) Charge to ER UI account$24,000 ($2,400 x 10
claims) now NON- RECOVERABLE due to Pattern of Failure. Additional
Exposure / Negative Impact May raise AUDIT RISK for other UI areas,
other state taxes, other jurisdictions May elevate ER experience
rating
Slide 22
www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO Audit Alert: Inter-Agency Info Sharing
www.employmenttax.com Phone: +1(800) 518-3874 | email:
[email protected] Join ETS Fed & state sharing info, data
mining, creating cross-agency task forces. Questionable Employment
Tax Practices QETP Initiative -37 states & IRS Facilitated by
movement to electronic databases.
Slide 23
www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO QETP Results Through Mid-2012
www.employmenttax.com Phone: +1(800) 518-3874 | email:
[email protected] Join ETS Nearly 12,000 businesses examined.
States reclassified $1.8B+ in wages and assessed $27M+ via federal
data. IRS assessed almost $23M in taxes from state referrals. Over
107,000 workers reclassified. Significant incentives to agencies to
aggressively evaluate and audit employers.
www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO www.employmenttax.com Phone: +1(800)
518-3874 | email: [email protected] Join ETS DOL & state
agencies collaborate on secure, electronic, standardized-format
platform for UI data transfer. SIDES E-Response: web-based for
smaller ERs (limited claims). SIDES: direct data exchange for TPAs
and larger ERs, requires internal IT & $$$ for setup. Aims to
improve timeliness and completeness, reduce overpayments &
erroneous charges, lower UI tax rates. 46 states in some stage of
SIDES implementation (.not CA)
Slide 26
www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO UI Integrity Oversight Plan Designate a
Person or Team Total UI Claims (also by state/location) Which
claims failed to be timely/ adequate? Why? Who? Track win/loss for
protests. For losses, why? Who? Track win/loss for appeals. Why?
Who? Impact on experience rating? Calculate cost to organization.
Find & fix areas of organizational weakness.
www.employmenttax.com Phone: +1(800) 518-3874 | email:
[email protected] Join ETS
Slide 27
www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO www.employmenttax.com Phone: +1(800)
518-3874 | email: [email protected] Join ETS ACT. Provide
information to UI agencies that is: Accurate Complete Timely Best
Practices
Slide 28
www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO Controllable Risk Factors Contributing to
UI Cost & Noncompliance www.employmenttax.com Phone: +1(800)
518-3874 | email: [email protected] Join ETS Challenge #1:
Organizational Structure: Limited infrastructure committed to UI
process Minimal or non-existent intra-departmental technology for
seamless, timely receipt & effective follow-through for every
claim Inconsistent expertise responsible for program success
(turnover) = inconsistent program delivery Lack of corporate
recognition/support
Slide 29
www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO Controllable Risk Factors Contributing to
UI Cost & Noncompliance www.employmenttax.com Phone: +1(800)
518-3874 | email: [email protected] Join ETS Challenge #2:
Training for Results Educate invested parties (C-level, HR,
Payroll, Managers.) to recognize: Relationship between claim
process & cost impact to organization Secure/train competent
charge analyst: o Match benefit year wages vs. charges o Scrutinize
reports for charge irregularity o Audit charge statement to ensure
accuracy o Create effective contact process with agency o
Follow-through on reversing inaccurate charges
Slide 30
www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO Controllable Risk Factors Contributing to
UI Cost & Noncompliance www.employmenttax.com Phone: +1(800)
518-3874 | email: [email protected] Join ETS Challenge #3:
Initial Claim Protest- Strong From the Start Cost-effective
elements in initial claim protest process: o Detailed system of
records to collect/transmit required data o Mechanism to ensure
timely response/all initial claims o Follow-through procedures to
ensure agency compliance o Built-in triggers to determine needed
process improvement
Slide 31
www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO Critical Report Audits & Tracking
www.employmenttax.com Phone: +1(800) 518-3874 | email:
[email protected] Join ETS Track results/determine program
compliance & process improvement initiatives Manage/scrutinize
high cost contributors Identify strong program performers Charge
impact driver by separation mix and charge amounts Electronic
benefit charge audit system (cross-check all charges) Ensure charge
accuracy against agency tables/formulas Tools for aggregate review
& analysis of real time reports
Slide 32
www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO UCM Plus Screenshot www.employmenttax.com
Phone: +1(800) 518-3874 | email: [email protected] Join ETS
Heres where an electronic solution can really help minimize your
costs by delivering advanced reporting features and supporting
Accurate, Complete & Timely responses to agency. This image has
been redacted to protect the integrity of ETS UCM Plus UI Claims
Management Solution. Should you wish to view a demo of the
software, please contact ETS at [email protected].
Slide 33
www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO UI Integrity Prep Checklist
www.employmenttax.com Phone: +1(800) 518-3874 | email:
[email protected] Join ETS Done?UI Prep Item Understanding of
Issues (i.e. Costs & Audit Exposure) Internal Assessment of
Readiness / Exposure Develop a Plan / Organizational Strategy
Identify Responsible Parties (Individual or Teams) Establish
Training for Key Staff (and/or strategy for TPA Partner) Regular
Reporting and Measure Success / Areas for Improvement (Access to
Real-time Reporting Tools) Rinse & Repeat
Slide 34
www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO Retro UI Review www.employmenttax.com
Phone: +1(800) 518-3874 | email: [email protected] Join ETS
General Evaluation Contact ALL UI jurisdictions Perform account
balancing (per state records) Qtr. by Qtr. rearward review.
Determine what credits found eligible for refund & if debits,
found if correct. Research for any missing / incomplete or untimely
reporting on the account. Review all M&A past 3 years. Help
reduce source of potential penalty or increased UI tax expense.
Photo credit: motonemotone
Slide 35
www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO ETS Resources UI Integrity State
Legislation TrackerState Legislation Tracker How Nonprofit
Employers Can Reduce UI CostReduce UI Cost Tips on Choosing a UCM
VendorChoosing a UCM Vendor Go here to download three pages of UI
Tips from ETS.here ETS UI Tips DownloadDownload this one page
checklist to assess the state of your UI Claims Administration Is
Your UCM Broken? Go here to learn more, and here to contact
ETS.here Learn more about ETS UCM Plus Solution
www.employmenttax.com Phone: +1(800) 518-3874 | email:
[email protected] Join ETS ETS Blog Go here to get ETS best
UCM blog posts and resources in one place.here
Slide 36
www.domain.com Phone: +1(123) 456 78 90 | e-mail:
[email protected] YOURLOGO Torrance, CA and Guilford CT (800)
518-3874 Connect with us on LinkedIn CONTACT ETS
www.employmenttax.com Phone: +1(800) 518-3874 | email:
[email protected] Join ETS thank you! Q&AQ&A Questions
& Requests for Presentation Slides: : Ross Henderson-COO
[email protected]