Will My Employees Earn More on Unemployment If They Quit?
Can your employees make more money if you lay them off? Will they stick with you if they have that as an option? Business managers, leaders, and owners have rarely seen tougher times. Specific niches or industries may pass through an existential crisis now and then. But the level of economic devastation the COVID-19 pandemic inflicted remains unprecedented.
Instead of business niches or industry sectors, the global economy almost collapsed. This in turn forced business leaders to take tough and risky decisions in order to survive. They also had to combat new concerns about business continuity, including performance appraisal methods, workforce size sustainability, and overall payroll spending. This blog explores key facts about unemployment benefits that workforce managers may do well to learn.
Can Your Employees Live Better on Unemployment Benefits?
The record unemployment rates that followed the pandemic early on in 2020 were the worst in modern times. And the number of people signing up for employee benefits in the United States often did not include self-employed professionals or freelance workers. This posed several concerns, including whether the social security system was capable of managing skyrocketing unemployment. However, there is also the concern whether certain employees may simply quit their jobs and decide to live by the same (or even) better standards they enjoy on their current case.
The latter concern is of significant importance. A mass exodus of workers may create serious skill gaps in critical areas. If your workforce turnover rises too high, you may face an unsustainable cycle of hiring, firing, and replacing employees. In any case, business managers need to be aware of the options available to both them and to their workers in case they do need to be laid off. They may need to address and understand what is covered in the unemployment benefits offered in most parts of the USA. Read on for more information.
Understanding State Unemployment Benefits
Unemployment benefits are part of the larger social security system most American citizens have access to. These are designed to act as a safety net, and reduce the impact of a sudden loss of income. The unemployment benefits are designed to offer at least a basic income to unemployed Americans until they rejoin the active workforce. All states in the country offer unemployment benefits to people who have been temporarily or permanently laid off. Most states use publicly available information, such as income tax records, employment history, payroll information, and even tax returns to establish the veracity of a claim for unemployment benefits. In any case, only residents of a state can claim unemployment benefits from that state.
The New FPUC Program
The state unemployment benefits system is one of the cornerstones of the American way of life. However, the FPUC program is a more recent and targeted addition to the social security infrastructure. Introduced in March 2020, the Federal Pandemic Unemployment Compensation is an additional benefit that unemployed workers may be eligible for. However, since it is a federal program, every qualifying American citizen in any part of the country may be eligible, instead of the residents of a specific state. On top of the benefits your workers can claim from the state, they may also be eligible for another $600 per week under the FPUC. Currently, subsequent legislation has readjusted the FPUC payout to $300 a week.
What Happens When Employees Claim State Unemployment and FPUC Benefits?
This is a question of specifics. As an employer, while you may offer unemployment insurance, you don’t really get a say in the claims or payouts. The unemployment division of the state’s department of labor will usually call the shots. However, every time one of your workers files an unemployment claim, you can expect a call from the state’s labor agency. They will usually enquire about the claimant’s employment status, reasons for leaving, and the possibility of continued employment. This information will play a pivotal role when the department decides whether to accept or reject a claim.
What to Tell Your Workers?
Since you don’t control the outcome of an unemployment claim, it is usually inadvisable to promise anything to your workers that you cannot deliver. The decision to pay an unemployment claim does not rest in your hands. You can neither confirm nor deny their standard of life will change significantly on unemployment benefits. Therefore, the best you can do is communicate the broad circumstances that can result in an accepted or rejected claim to your workers.
For example, a valid layoff would include situations where the employee is willing and able to continue in their role. However, the employer may not be willing or able to keep the employee on the payroll, or they may temporarily lay off or furlough the worker. This will usually be an acceptable claim. However, it may not always result in a payout. On the other hand, where the employee’s reason for unemployment isn’t being laid off, injury, disability, or any other permitted circumstances, the situation changes. If an employee is voluntarily resigning without any valid reason to be unemployed, they may not be eligible to claim benefits.