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Tips to reduce small business unemployment insurance.

Small businesses and entrepreneurs with employees are required to pay unemployment insurance or taxes. The unemployment insurance rate for start-ups is initially based on a standard rate. After time, a small business will become an experience-rated employer.

Important Tip Respond to requests from the unemployment agency promptly (within 12 days in Colorado) and accurately. File appeals on time and attend appeals hearings. Help the unemployment insurance agencies detect and prevent fraud. All of these actions can help keep your rates down.

Unemployment costs are influenced by small business history.

This means that the amount of the unemployment insurance rate is based upon the experience of the small business. If the small business pays more into its unemployment insurance account than it has benefits charged against its account, the small business will have a lower rate. If the opposite is true, the small business will have a higher rate. As a result, it is important for a small business to be careful about benefits charged against its account.

Reducing unemployment claims

Benefits are charged against an account when former employees make unemployment claims. There are several appropriate steps a small business can take to try to reduce these claims. But, remember that it is unlawful for any employer to require an employee to release or waive any rights to unemployment benefits. You can be prosecuted for pursuing such activities.

Many employees are not eligible for unemployment benefits. Unemployment benefits are not a welfare program. Unemployment insurance is temporary income to help workers who are unemployed through no fault of their own. So the reason for an employee's separation from a small business determines whether an employee is eligible for unemployment benefits. There are many rules and regulations surrounding this analysis, but the following key points should be kept in mind.

Voluntary terminations and violation of rules

Generally, if an employee of a small business voluntarily quits, the employee is not eligible for unemployment. It may be appropriate to have the employee acknowledge that it was voluntary — but be careful not to coerce anyone to sign something that says it is voluntary if it really wasn't voluntary. An employee also isn't eligible for unemployment benefits if the termination is due to violation of a company rule that could result in serious damage or could have endangered the life of the worker or other persons (such as violating safety rules, divulging confidential information, falsifying expense accounts, etc.) As a result, it is important to have good policies and keep good records if an employee violates those policies.

Additional Information
Important Tip: 
Respond to requests from the unemployment agency promptly (within 12 days in Colorado) and accurately. File appeals on time and attend appeals hearings. Help the unemployment insurance agencies detect and prevent fraud. All of these actions can help keep your rates down.
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Unemployment Insurance