These two major trends in the Unemployment Insurance (UI) industry will have a noticeable impact on how employers manage the unemployment claims process.  As a result of overpayments to unemployment claimants during the recent great recession, Congress mandated that the states pass tough UI Integrity laws designed to penalize employers who are responsible for overpayments.  SIDES is an acronym for State Information Data Exchange System, and the UI SIDES program is an initiative led by the Department of Labor to have state workforce agencies exchange information electronically rather than by the historical hard copy paper system delivered through the U.S. mail.  This article will explore the positive and negative impacts of these two initiatives on employers.

UI Integrity Laws

This legislation is often referred to as Section 252 legislation as it relates to a specific section of the 2011 Federal Trade Adjustment and Assistance Protection Act (TAAEA).  This section requires states to enact legislation by October 21st, 2013 to address the issue of overpayments in the unemployment insurance system and to impose penalties on employers and/or their agents should action (or inaction) on the employers part lead to overpayments.

As of July 1st, 2013, 33 states have passed legislation to comply with this mandate with a number of other states on the verge of completing this legislation.  As you can imagine, there are a large number of specific details and unique state nuances associated with this legislation, and Employers Edge will keep you abreast of those distinctions.  However, there are two key principles that are common amongst all states, and these are the ones your teams dealing with the day to day unemployment issues should be aware of:

  • The core principle behind this legislation is to prohibit the relief of benefit charges against an employer’s account when that employer fails to provide the state with timely and detailed separation information at the initial adjudication level of the claim.
  • Practically speaking, what this means is that if the claimant wins at the initial level, and then the employer overturns the decision at the hearing level, the employer will be liable for the benefit charges collected by the claimant up to the point of the hearing decision if it’s determined that the employer did not provide complete information upfront at the initial level.
  • Most states also now have a “pattern provision,” meaning further penalties can be imposed if an employer or the employer’s agent (Employers Edge) establishes a pattern of failing to provide detailed separation information at the initial claim level.
  • Suffice it to say that we are prepared for these legislative changes and do not want any of our employers to ever be exposed to the penalties associated with establishing a pattern of untimely or insufficient response as these penalties vary from light to more acute as we look at different states.

Employers Edge has long stressed the importance of providing the detailed separation information at the initial claim level as this is a proven approach that delivers better results.  The key point to keep in mind in light of this new legislation is that the days of submitting a “generic protest” at the initial claim level in hopes of gathering the information by the time the hearing rolls around are about to come to an end.

UI SIDES (Separation Information Data Exchange System)

UI SIDES is a program initiated by the US Department of Labor (DOL) to build a standard interface between state workforce agencies and employers for the purpose of electronically exchanging unemployment claims information.  The objective of the DOL is to reduce overpayments to claimants by getting more comprehensive separation details at the initial claim level and to implement an electronic interface that will improve upon the current paper process.

As July of 2013, Employers Edge is one of only four Third Party Administrators (TPA’s) that is live on the UI SIDES system.  We are currently operational or in testing about to go live in the following states:  Arizona, Colorado, Delaware, District of Columbia, Georgia, Idaho, Illinois, Kansas, Missouri, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, West Virginia, and Wisconsin.

The benefits of this effort are numerous for Employers Edge customers.  First and foremost, as each state goes live, it eliminates the initial claim mail processing time (1 to 4 days) affording our customers more lead time to gather separation details at the initial claim level.  One of the byproducts of the UI SIDES program will be the amount of details the states are requesting via the electronic claims response format.  Their objective is clear, and that is to gather sufficient details electronically to make the correct decision at the initial level.  Employers can expect to see subtle changes to our reach out requests as we launch a particular state on the UI SIDES system with certain states requiring particular details on their separations.  A sample of those details may include:

  • The final incident leading to the discharge
  • Dates of warnings and prior incident details
  • The name and title of the person who discharged the claimant
  • Additional details when separation pay is involved such as average weekly wages and hours

Summary

The central conclusion to be drawn both from the new UI Integrity legislation and the UI SIDES system is that the future of unemployment claims management will have an ever increasing emphasis on detailed separation information at the initial claim level.  Employers will no longer be able to engage in the practice of submitting a generic protest at the initial level with the plan of providing the detailed backup information and documentation at the hearing level.  Employers Edge is well positioned to meet the new state demands with innovative processes that afford our customers the maximum lead time necessary to manage this area most effectively.