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Do we wind up paying for unemployment comp benefits?

by on
in Employee Benefits Program,Human Resources,Small Business Tax,Small Business Tax Deduction Strategies

Q. I just received a notice from the state of Colorado seeking information about an employee who just left our company. The state is trying to determine whether she is eligible for unemployment benefits. If she is awarded unemployment benefits, will the company be charged for that amount?

A.
Not really. Unemployment benefits are provided by the state, and financed by a payroll tax. Your company will not be sending the checks or reimbursing the state for the checks it sends. The tax rate is based in part on the number of claims, so there is a connection, but it is not direct or dollar for dollar.

State law favors awarding benefits, so you will need not only a good reason to challenge benefits, but also that reason must meet at least one of the requirements to disqualify an applicant for benefits. If you do challenge the person’s eligibility for benefits, it might lead to her getting an attorney and having a hearing where your staff is under oath, making statements that could be used in a future dispute. Consider carefully whether that is consistent with your objectives.

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