Unemployment Insurance

Most of the following information was taken from the Tennessee Department of Labor and Workforce Development Web site: www.state.tn.us/labor-wfd/ui/ui.htm.

What is Unemployment Insurance?

Unemployment Insurance is a joint federal and state program that provides benefits to unemployed workers who lose their jobs through no fault of their own. Unemployment Insurance benefits are paid from the Tennessee Unemployment Insurance Trust Fund. This fund is used only to pay benefits to Tennessee's unemployed; it is financed entirely by Tennessee employers.

Who is liable for Unemployment Insurance coverage?

Most employers are liable under the Tennessee Employment Security Law. An employer's liability is based on criteria set by federal law. Liable employers include:

all governmental employers.
certain nonprofit, domestic, and agricultural employers.
all other employers who have a total payroll of $1,500 or more in any quarter in the current or previous calendar year, or who have at least one employee for any day during 20 different weeks during the current or previous calendar year.

How do employers establish an Unemployment Insurance account?

All employers doing business in Tennessee are required to complete and file the Report to Determine Status/Application for Employer Number, LB-0441, to determine their liability for Unemployment Insurance. Employers liable for Unemployment Insurance will be assigned an employer account number.

What is an employer's reporting liability?

Liable employers are required to report and pay premiums on employee wages each quarter. Employers have the option of reporting employee wages on Wage and Premium Report, LB-0456, or by magnetic media. All employers with 250 or more employees must report their wage information by magnetic media.

To get information on employer liability and Wage and Premium Reports, or to obtain a Report to Determine Status Application, call 615-741-2486.

How much does Unemployment Insurance coverage cost employers?

Most employers are liable to pay premiums into the trust fund on the first $7,000 paid to each employee during a calendar year. Premium rates for new non-governmental employers are based on the experience of their industry grouping, if the industry grouping has an exceptionally high benefit payout. All other new employers are assigned a 2.7% new employer premium rate. Historically, construction and mining are the only industries with new employer rates greater than 2.7%.

Employers liable for premiums for three consecutive calendar years as of December 31 have rates based on their experience. Premium rates range from 0.0% to 10% for non-governmental employers and from 0.3% to 3% for governmental employers. State and local governments and certain nonprofit employers have the option of paying premiums or reimbursing the trust fund for their proportion of benefits paid to former employees.

For premium rate information, call 615-741-3246.

Who is eligible for Unemployment Benefits?

Unemployment Insurance payments are not based on need, but on the wages a claimant earned during his/her base period. A claimant's base period is the first four of the last five completed calendar quarters prior to the calendar quarter in which the claimant filed a claim for benefits.

To be eligible for benefits, a claimant must have:

separated from the most recent covered employment through no fault connected with work,
earned an average of $780.01 in the two highest quarters of his/her base period, and
have at least the lesser of six times the claimant's weekly benefit amount or $900 in the claimant's base period outside the high quarter.

A claimant's weekly benefit amount replaces about half of the claimant's lost weekly income, up to the maximum weekly benefit amount.

How does benefit payout affect an employer?

The unemployment benefits paid to a claimant are charged proportionately to the employers who paid the claimant wages during the claimant's base period. Governmental and nonprofit employers who elected to reimburse benefits must reimburse the department dollar for dollar for benefit charges to their accounts. All other employers have the benefit charges deducted from their reserve accounts, which directly affects their premium rate.

How can an employer reduce benefit charges?

Keep accurate records. If an employee claims he was paid more than he/she actually was, the employer needs proof of actual earnings.
Document circumstances leading up to and relating to a separation.
Answer any request for separation information completely and by the date specified on the form. Failure to do so could result in unnecessary benefit charges.
Verify each statement of benefit charges.
Appeal claims decisions believed to be incorrect within 15 calendar days of the notice. (If the claim is awarded anyway, the employer can appeal and request a hearing in front of a referee. )

How does the appeals process work?

Once a person files a claim for unemployment benefits, the Department of Labor and Workforce Development investigates whether he/she is entitled to benefits, and issues a written decision. The claimant or the employee can file an appeal if they do not agree with the decision. To do so, they must notify the Appeals Tribunal in writing within 15 calendar days of the mailing date of the Department’s decision. Form LB-0897 is used, and submitted to:

Department of Labor and Workforce Development Telephone: 615-741-1857

Division of Employment Security, Appeals Operations

500 James Robertson Parkway, Suite 780

Nashville, TN 372345-0600

What are the employer requirements when separating an employee?

Employers are required to give each separated employee the Separation Notice, LB-0489, within 24 hours of the separation. Separation Notices help the department make a more accurate determination of benefit eligibility.
An employer who separates 25 or more workers simultaneously due to lack of work may file the Mass Separation Notice, LB-0490, instead of giving each employee a Separation Notice.

Note: Tennessee does require that terminated employees be paid any unused earned vacation pay. The last paycheck is due the next regular payday or 21 days from termination, whichever is later.

Contact your local Employment Security Office for any of the referenced forms.

What is the proper way to dismiss employees?

Dismissal should not come as a surprise to the employee or be sudden, unless the situation demands it (for example, in the case of embezzlement, drinking or drug use on the job). The employer should have a legitimate business reason for dismissing the employee, and assure that the reason is documented. An employer’s practices and policies should be evenhandedly applied to all employees.

In the case of discharge, the burden of proof lies on the employer to prove that a former employee was guilty of willful misconduct. The Web site www.state.tn.us/labor-wfd/ui/ui.htm describes the specific information that the State looks for in the adjudication of claims for benefits for absenteeism/tardiness, violation of company policy, poor work performance, and insubordination.

Another good resource on this subject is the nine-page chapter entitled “How to Fire Properly,” found on the Web site

www./businessweek.findlaw.com/employmentbook/hfchp8.html.

What are the employer requirements when reducing hours of work (partial unemployment)?

Workers can draw benefits during a week they are partially unemployed, however, their weekly benefit amount is reduced dollar for dollar for each dollar earned. A week of partial unemployment is a week in which an employee, due to lack of work, worked less than that employee's regular full-time hours and earned less than his weekly benefit amount, but more than the deductible allowance, which is the greater of $50 or 25% of the claimant's weekly benefit amount. At the end of each week in which an employee had partial employment, the employer must file the Joint Low Earnings Report and Claim for Benefits for Partial Unemployment, LB-0487, or file a partial claim on a computer diskette

For the Joint Low Earnings Report and Claim for Benefits for Partial Employment, contact any local Employment Security Office. For information on filing a partial claim on computer diskette, contact the Partial Claims Coordinator at 615-532-2330.