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On Oct. 7, 2013, a new unemployment insurance (UI) law went into effect in Oregon; it requires employers to respond timely and adequately to Employment Department notices regarding claims by former employees. Under the new law, employers who fail to comply and whose record shows a pattern of failing to respond in a timely or adequate manner will have their unemployment account charged for any overpayment of benefits.

In addition, the new law makes several changes to the Work Share Program, which allows employees to accept reduced hours and received partial unemployment benefits in lieu of being laid off during a slow work period. The new law excludes seasonal, temporary or intermittent workers from the program and specifies that the shared work plan must include a description of how program requirements will be implemented. It also requires the employer to estimate the number of layoffs avoided and certify that certain retirement benefits will be provided as if the workweek had not been reduced.

The new law specifies that employers will not be billed for benefits when the program is fully funded by the federal government and allows individuals receiving extended benefits to receive self-employment assistance benefits.

Oregon law requires employers to pay unemployment taxes on employee wages by filing quarterly tax reports. Individuals who are hired and compensated for their services are considered employees, and their compensation for service is considered taxable wages unless specifically excluded by law.

The new law specifies that an employer seeking relief from a requirement to pay UI benefits must file a request for relief within 30 days of receiving notice that a claim has been made. In instances where an employer establishes a pattern of failure to respond to notices in a timely manner, a failure to respond within the 30-day period will result in a charge to the employer’s account of the benefits paid to the individual in question, even if the benefits were the result of an overpayment.

The new law came about as a result of a 2011 federal law – the Trade Adjustment Assistance Extension Act (TAAEA) – that requires all states to implement laws by Oct. 21, 2013, and provide penalties for employers that fail to respond and demonstrate a pattern of failures to respond to state UI notices.

Congress’ intention in penning the TAAEA was to substantially reduce UI overpayments. Some employers, particularly those already paying UI taxes at the maximum rate, have not routinely responded to UI claim notices and simply accepted their reserve account charges as a cost of doing business.

Over the past several years, the amount of UI overpayments made to ineligible claimants has been estimated to be in the billions of dollars. Studies show, however, that a relatively small amount of the overpayments are due to employer non-responsiveness; rather, administrative agency errors and employee fraud have been overwhelmingly identified in the government’s reports to be primarily responsible for such overpayments.

To help avoid penalties for untimely responses, an early legal review of all terminations is recommended. Employers should consider developing a process for reviewing the circumstances of all terminations, whether employee- or employer-initiated, even before any claim is received. Also, given the emphasis on avoiding unnecessary overpayments, separation agreements providing that an employer will not contest UI claims should likely be avoided.

Don Stait is Special Counsel in Littler Mendelson’s Portland office. Contact him at 503-889-8874 or [email protected].