Q: As a MD small business owner, how long am I responsible for an ex-employee who is getting unemployment benefits?
This employee was fired for cause but I didn't appeal unemployment action because I thought her having to repay benefits already received was too harsh. But she was working part-time somewhere else when we fired her (for consistent rudeness to customers) and she continues to work at same part time job many months later. I know we should have appealed and we could have gotten statements or depositions from clients who complained about her, but the payback penalty seemed unduly harsh. Anyway, we didn't appeal but how long are we responsible for her unemployment benefits, and does her working part time matter?
A: This actually gets pretty technical, and this answer is not comprehensive. When someone files for benefits, the wages the individual earned in the first four of the five quarters preceding the claim are used to calculate monetary eligibility and the weekly benefit amount. This is called the base period. If there is only one employer that reported wages in that base period, then all of the benefits are charged to that employer's account. The benefit charges then go into a formula to determine the employer's subsequent year tax rate. If there are multiple employers in the base period, then they typically will be charged proportionally based on the percentage of base period wages that are attributable to each one. The simple answer to your question is that you are potentially on the hook for a claimant's benefit charges until you drop out of the base period. Depending on your benefit charges and payrolls, it can end up being quite costly for you to permit claims to slide. As a general rule, you should always respond to the Unemployment Insurance Division, should answer all claims, and should resist non-meritorious Unemployment Insurance claims. A lack of vigilance can cost you directly, and it if you end up allowing many claims to go unanswered, you will eventually hit a maximum tax rate after which the benefits charged against you are socialized to the rest of the employers in your state.
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