I need help with a business question

Management
Tutor: None Selected Time limit: 1 Day

Unemployment insurance  explain how it influences staffing. 

Nov 10th, 2015

Thank you for the opportunity to help you with your question!

Employers do not like it if their employees claim Unemployment Insurance benefits, because this can cause their Unemployment Insurance (UI) tax rate to go up.  Employers do not want to pay a higher UI tax rate.  This UI tax rate follows an experience rating.  The more incidents where an employee files a valid UI claim and receives UI benefits will give the employer a bad rating and thus pay higher UI tax rate.  Kind of like having auto insurance.  If I got too many accidents or driving violations, my auto insurance rate would go up and I would have to pay higher premiums.  I would not want that to happen.

This is why Temporary Staffing Agencies or "Employee Leasing Agencies" are more appealing to employers.  Instead of the employer being responsible for the UI tax rate, the staffing agency is responsible for the UI tax rate.  So if an employer does not like a particular employee and fires him or her, that employer's UI tax rate is not affected, it would be the staffing agency's UI tax rate that is affected.  But temporary staffing agencies have a trick around this.  You see, the longer an employee works for a company, that employee is able to claim UI benefits in case of getting fired.  So temporary staffing agencies try not to place their workers at a Company too long in order that the employee is NOT QUALIFIED for UI BENEFITS.  That is tricky.

Please let me know if you need any clarification. I'm always happy to answer your questions.
Nov 10th, 2015

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