How SUTA Works and How to Keep Your Security Guard
The first time that I saw the results of a bid where every bidder was required to submit their company costs (e.g. unemployment rate, uniform cost, workers comp) to show how their billing rate was calculated, I was shocked by my company’s State Unemployment Tax Act (SUTA) rate compared against some of the other bidders. I thought that something had to be wrong with our rate because it was noticeably higher than some of the other bidders’. So I did a little research and figured out how SUTA is calculated.
Although it is never pleasant to fire an officer, it’s even worse if you fire one and then get penalized with a higher unemployment insurance rate for your trouble. Up until that time, I didn’t have a formal process to accurately document security officer terminations—and I was paying the price with a high SUTA rate.
As a security guard company, if you don’t terminate an officer for cause and with documentation to back it up, the state may award the officer some unemployment compensation, which will increase your SUTA rate. Understanding SUTA is critical: a higher SUTA rate directly increases your cost of doing business, making your bids less competitive and less profitable.
Here’s what you need to know about how to control this unavoidable cost of doing business.
Only (or Mostly) Terminate for Clear Cause. Most employers pay into an unemployment fund, so if employees are laid off they can draw unemployment benefits, says Angela Saizan, director of accounting at HR Solutions. As an employer, you really only want an employee to draw unemployment if you had no cause to let them go other than changing business needs, i.e. a layoff.
In some states, when you terminate an employee for cause, you send a notification to the state letting them know what happened. But this doesn’t stop the employee from applying for unemployment benefits, Saizan says, and you may find yourself engaged in a lengthy appeals process.
Unfortunately and as we all know, there is no tried-andtrue way to eliminate the chance of a security officer filing an unemployment claim. Francis Boustany, a human resources representative at HR Solutions, confirms this. However, he says that keeping the process civil can help. “Some people will file just to get back at the company after a termination, so make sure the termination isn’t a surprise and goes as cordially as possible.”
Establish Strong Disciplinary Procedures. One of the best ways to protect yourself against unemployment claims and mitigate the risk of a high SUTA rate is to ensure you have a clear disciplinary policy, as discussed above. A strong disciplinary procedure can deter security officers from filing false or frivolous claims.
The best disciplinary procedure in the world is no good if you don’t enforce it. Train your managers on how to effectively document disciplinary issues. Even if one of the steps in your progressive disciplinary policy is a verbal warning, managers should write down the date and time of the meeting, who attended the meeting with the officer, what was discussed and what the next steps will be.
Be explicit about what your officers can do to improve, David says, as that will create a record of the employer trying to help employees improve rather than simply trying to punish them.
Accurate documentation also includes meaningful annual reviews. If an officer is terminated for cause but has spotless annual reviews, that might raise red flags to the appeal board if there is a claim. Ensure managers document infractions as they happen, and that they prepare accurate annual reviews rather than just recording positive things to get through the process easily, he says. “The best practice is to be consistent and document everything.”
I learned the hard way that when it comes to SUTA, the best offense is a good defense. If you do not currently have a program in place to manage your SUTA rate, you should implement one as soon as possible, as doing so will help cut your company’s costs and make you more competitive in the bidding process.
While many of your HR policies will be geared toward protecting your company from legal and financial liability, you should also be thinking about protecting your officers so that they can be assured of a fair and safe workplace. Next, we will talk about a crucial issue¬–a strong sexual harassment policy.