Under amendments to the Unemployment Insurance Integrity Act of 2011 that took effect in late October, employers must now timely and adequately respond to a state unemployment agency's information request about an employee's initial insurance claim. Consequences for violating the requirement vary from state to state, but, at a minimum, an employer will not be relieved of charges to its account that result from the employer's failure to timely or adequately respond to a request if the employer has established a pattern of untimely or inadequate responses. Fines and penalties can also apply. In California, for instance, fines against an employer can be up to ten times the weekly benefit amount (with a cap of $4,500) for willfully making a false statement or willfully failing to report a material fact about a termination.
Not only does the amendment underscore the importance of timely and accurate reporting to a state agency, it also calls into question an oft-used strategy for facilitating amicable employee departures: the employer's agreement not to contest an unemployment insurance claim. Such an agreement (whether verbal or written) could create conflicting obligations to the state agency and the departing employee. Thus, before entering into any such agreement, employers should consult legal counsel to assess risk and prepare appropriate wording that preserves the employer's ability to respond truthfully and completely to the state agency.
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