18  ILLINOIS BUSINESS LEADER
CONNECTING
Most employers don’t protest unem­
ployment claims filed by their former 
employees and most don’t know how 
much this costs them. Employers 
commonly don’t realize that awarded 
unemployment claims determine the 
unemployment tax rate assigned to 
your business.  In 2024, this tax rate 
is applied to the first $13,590 of an 
employee’s wages are taxed.   
	
In 2024, the minimum tax rate 
a business may receive is .850% and 
the maximum is 8.650%.  On a mil­
lion-dollar taxable payroll, a tax rate 
of 1% gives a tax of 10,000 and 8% 
gives a tax of $80,000.
	
Clearly, the awarding of unem­
ployment benefits to your former 
employees can be costly.  And just 
think if a claimant was undeserving 
of benefits but awarded – this could 
unnecessarily cost your business 
thousands of dollars.
	
Basically, the standard for un­
employment eligibility is simple and 
straightforward. If a claimant loses 
his or her job through no fault of 
their own, they get benefits.  Classi­
cally, this is a layoff.  And claimants 
fired for poor work performance are 
not at fault either for being unem­
ployed.  They did nothing wrong; 
they were in over their heads, and 
they may be awarded benefits.
	
Poor performance is not miscon­
duct and claimants should be denied 
benefits if they commit misconduct 
at work. Misconduct is willful wrong­
doing – the claimant is at fault for 
their unemployment. They are also at 
fault for their unemployment if they 
quit their job so long as the quit isn’t 
attributable to the employer.
	
But to enforce this standard an 
employer must do certain things, and 
he or she should want to, because 
unemployment taxes can burden a 
business. 
	
First, an employer should make 
good terminations based on a final 
incident of wrongdoing, if one oc­
curred, with an appropriate warning 
history in light of a clear company 
policy or practice.  And the employer 
should keep good records regarding 
employee quits, recording the reason 
for the quit if its available to him or 
her. Written resignation letters may 
be useful on this score. 
	
Second, an employer should 
respond to all unemployment claims, 
describing factually what happened 
at the end of employment.
	
Third, employers should appeal 
unreasonably unfavorable decisions 
Reducing Unemployment Tax Costs
David Prosnitz
Personnel Planners, Inc.

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