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1. I run a business. Therefore I make jobs. Or don't. 2. If I fire an employee, a portion of the cost of that person's unemployment claims is charged back to

1. I run a business. Therefore I make jobs. Or don't. 2. If I fire an employee, a portion of the cost of that person's unemployment claims is charged back to me. The employer. It isn't government largesse that funds unemployment claims. It's me. 3. Will this program be yet another potential cost to me? Hard to tell from the PR and press-gab. We'll have to see the law and how it is implemented. Devil in the details, etc. 4. My payroll is suddenly $100K/year lighter than it was. Am I going to replace that guy with another full-timer? Fuck, no. Hello, independent contractors. 5. By the way. I pay 100% of the medical costs for all my employees.

muhfuhkuh 15y ago
"My payroll is suddenly $100K/year lighter than it was. Am I going to replace that guy with another full-timer? Fuck, no. Hello, independent contractors." From this country? That matters much more than whether they'd be contract or full-time.
- philiphodgen 15y ago
  Absolutely from the U. S. and A. All of them.
chopsueyar 15y ago
If you fire an employee, why do you pay unemployment? I would understand if you laid them off, but firing? Also, if you are paying for their unemployment, why is unemployment being deducted from their paycheck too?
- clarkevans 15y ago
  In most states it's quite difficult to prove that you fired for cause -- performance is quite subjective. Typically the employee needs to do something dramatic & harmful for you to deny unemployment.
  - roc 15y ago
    It's pretty easy to document poor performance. Any McJob employer can swing it and their margins are almost certainly lower than anything involving knowledge workers. I understand that no-one likes to do the business-overhead side of things in small businesses. But either the costs of paying (undue) unemployment aren't that big of a problem, or the employer has no-one to blame but themselves for not documenting cause.
    - clarkevans 15y ago
      There's a big difference between McJob and software development. If someone doesn't handle N customers, fails to show up on time, or has several documented customer relationship issues: it is clear cut. You have to give the employee several opportunities, etc. If you have an equivalent recipe for a marginally performing software developer that doesn't cost more to implement than just paying the unemployment : I'd love to hear it. Also consider team morale. Waiting for several phases of failure to "document" your case is a great way to lose your top performers and lose a customer. I think it's less expensive just to fire -- ideally /w severance in exchange for unemployment, if your state permits it.
      - roc 15y ago
        > "There's a big difference between McJob and software development." Yes and no. The basics are the same: you need to document responsibilities, goals and performance. Document performance that doesn't meet the goals. Document some sort of plan by which you try to help the underperforming employee meet their goals and then document their continuing performance. Is it potentially cheaper to just pay a modest severance or unemployment insurance? Quite possibly. But documenting performance is not voodoo and the fact that just paying a modest severance or unemployment is cheaper than documenting performance rather undercuts the assertion that unemployment costs are onerous.
        westicle 15y ago
        Not to mention fairer on the employee. Not everyone is a self-starter or "rockstar". Failing to document clear responsibilities and goals and then measure performance against those goals shortchanges you and them. This may be an unpopular sentiment around HN circles, but just expecting every employee to "get it" and not having a consistent process to deal with underperformance (which can have many different and often addressable causes) is a crappy way to treat employees in my view.
- gwright 15y ago
  I don't think people are being careful about the terminology here. Firing could mean terminating employment because someone is no longer needed (what you are calling 'laid off') but it can also mean terminating employment because they broke some rules or laws (i.e. didn't show up for work, harrased co-workers, etc). If you are fired "with cause" (i.e. you did something wrong) you aren't eligible for unemployment. If you quit you are not eligible for unemployment. Only if you are fired "without cause" are you eligible for unemployment payments.
  - HeyLaughingBoy 15y ago
    If you quit you are not eligible for unemployment. Let's be careful about this. It depends on the reason you quit. If you were being harassed and the company did nothing about it, or you had unsafe working conditions, etc, you can still collect. It's better to say that if you quit for reasons that have nothing to do with the employer, you cannot collect unemployment. I had a co-worker who quit because the raise he was promised (in writing) at hiring time never materialized. The company had to pay unemployment while he looked for work.
    - gwright 15y ago
      Good point. Thanks for the meta-clarification.
- pkteison 15y ago
  The employee files for unemployment insurance regardless, lying and claiming they were laid off. You file a dispute, claiming they were terminated for cause. The unemployment office makes it quite clear that you will lose your dispute and should drop it. You refuse, because you have a good clear case where clearly this guy was fired for cause. You present your good clear case, and you lose anyway, and the person fired for cause still gets unemployment, and your unemployment insurance rates go up. That's just how it works. It's not how it's written, and it's not how it's supposed to work, but it's how it works.
  - adient 15y ago
    I find it odd when people create such strange generalizations in their head. Whether this comment is from your own anecdotal experience or not, it is just plain wrong as a general matter. Defeating an unemployment appeal is certainly possible and not that difficult if you've done your due diligence during the process.
  - riverlaw 15y ago
    You are wrong. I won every case (~5) filed against me over ~3 years working at Tech Support. If you have proper documentation as to why you fired someone you do not have to pay unemployment insurance.
    - pkteison 15y ago
      I'm flat out wrong? I see your anecodote and raise you a statistic: "In 2009, employers filed 405,153 appeals to deny benefits to former workers and 36% won, a figure that hasn't changed too much in recent years, according to the U.S. Department of Labor." Wall Street Journal "Feeling Blue about Pink Slip Taxes" http://online.wsj.com/article/SB10001424052702303960604575158214061078180.html http://online.wsj.com/article/SB1000142405270230396060457515... 36% won. So 2/3rds of the time (read: most of the time), employee wins. By all means, still appeal. But odds are not fantastic. Plan on having to pay out some unemployment that you shouldn't have to. A written employee handbook and records showing when policies were violated will save you some money sometimes, but don't count on it. You can fire employees, for cause, and still see your insurance go up, even with an appeal.
ctdonath 15y ago
"2. If I fire an employee, a portion of the cost of that person's unemployment claims is charged back to me." Can you elaborate on this? It's something I've long heard and failed to grok. How can an employer, as normal business practice, have to still pay a fired employee any amount?
- SoftwareMaven 15y ago
  You have to pay for unemployment insurance. The more people who make claims against you, the higher your insurance gets. You probably aren't going to get charged 100% of the employee's unemployment, but you get charged a goodly chunk.
  - philiphodgen 15y ago
    That's exactly right. For unemployment insurance you pay a percentage of your payroll to the government. The percentage depends upon the number of claims your ex-employees have put on the pool of money in the unemployment insurance scheme. More claims means a higher percentage. That makes the cost of a replacement employee higher because you're paying for the cost of prior employees' unemployment claims when you are making unemployment contributions for the new employee.
    - chopsueyar 15y ago
      You act like this was an unknown cost of having employees.
  - deleted 15y ago
    [deleted]
  - dualogy 15y ago
    Seriously? I'm surprised anyone is still hiring at all in the US! Sheesh, what a policy. "Hello independent contractors" -- I hear you.
    - larrywright 15y ago
temphn 15y ago
This law will be written in a week by Whitehouse interns without any experience running a business or employing individuals. And it will be constructed to be applicable across vast swaths of the US economy, or else it would not be "stimulative". And this administration's previous attempts to meddle in business resulted in the largest VC loss in history, namely Solyndra. What could possibly go wrong?
teyc 15y ago
Hi Phil, I've been following your blog about US taxes, but didn't know you post at HN. Small world. I also have my doubts about this program. Employers are humans, and humans never associate "quality" with "discount". Right now, the people who are unemployed face the real risk of exiting the economy altogether, along with their knowhow, and this will cost the economy as a whole in the long term. Meanwhile, businesses are not going to hire if the consumers aren't there. The problem with trying to restart the economy with government stimulus is that people are maxed out on their debt. The debt is acting like a sponge, sucking out any additional money that come from the government. The NPR Planet Money talked about how Japan's economy entered its longest growth period post the crash when the PM forced the banks to clean up its bad loans and recapitalize. Subsequently, government stimulus started to take effect. The government has been reluctant to do this, and it will cost the US in terms of its economic dominance as competing countries race ahead on its capital. I believe any government money is better spent not trying to put people back in employment through incentives, but instead keep these people "engaged" in the economy. Be it through reimbursement of expenses in attending job interviews - fuel is expensive when you are out of work; Making the pool of "consultants" and "contractors" that you allude to more visible. The mainstay of jobs post crash is going to be a small pool of permanently employed plus casualized, short term contract work. The sooner the government recognizes this, the better.

muhfuhkuh 15y ago

"My payroll is suddenly $100K/year lighter than it was. Am I going to replace that guy with another full-timer? Fuck, no. Hello, independent contractors." From this country? That matters much more than whether they'd be contract or full-time.

philiphodgen 15y ago
Absolutely from the U. S. and A. All of them.

chopsueyar 15y ago

If you fire an employee, why do you pay unemployment? I would understand if you laid them off, but firing? Also, if you are paying for their unemployment, why is unemployment being deducted from their paycheck too?

clarkevans 15y ago
In most states it's quite difficult to prove that you fired for cause -- performance is quite subjective. Typically the employee needs to do something dramatic & harmful for you to deny unemployment.
- roc 15y ago
  It's pretty easy to document poor performance. Any McJob employer can swing it and their margins are almost certainly lower than anything involving knowledge workers. I understand that no-one likes to do the business-overhead side of things in small businesses. But either the costs of paying (undue) unemployment aren't that big of a problem, or the employer has no-one to blame but themselves for not documenting cause.
  - clarkevans 15y ago
    There's a big difference between McJob and software development. If someone doesn't handle N customers, fails to show up on time, or has several documented customer relationship issues: it is clear cut. You have to give the employee several opportunities, etc. If you have an equivalent recipe for a marginally performing software developer that doesn't cost more to implement than just paying the unemployment : I'd love to hear it. Also consider team morale. Waiting for several phases of failure to "document" your case is a great way to lose your top performers and lose a customer. I think it's less expensive just to fire -- ideally /w severance in exchange for unemployment, if your state permits it.
    - roc 15y ago
      > "There's a big difference between McJob and software development." Yes and no. The basics are the same: you need to document responsibilities, goals and performance. Document performance that doesn't meet the goals. Document some sort of plan by which you try to help the underperforming employee meet their goals and then document their continuing performance. Is it potentially cheaper to just pay a modest severance or unemployment insurance? Quite possibly. But documenting performance is not voodoo and the fact that just paying a modest severance or unemployment is cheaper than documenting performance rather undercuts the assertion that unemployment costs are onerous.
      - westicle 15y ago
        Not to mention fairer on the employee. Not everyone is a self-starter or "rockstar". Failing to document clear responsibilities and goals and then measure performance against those goals shortchanges you and them. This may be an unpopular sentiment around HN circles, but just expecting every employee to "get it" and not having a consistent process to deal with underperformance (which can have many different and often addressable causes) is a crappy way to treat employees in my view.
gwright 15y ago
I don't think people are being careful about the terminology here. Firing could mean terminating employment because someone is no longer needed (what you are calling 'laid off') but it can also mean terminating employment because they broke some rules or laws (i.e. didn't show up for work, harrased co-workers, etc). If you are fired "with cause" (i.e. you did something wrong) you aren't eligible for unemployment. If you quit you are not eligible for unemployment. Only if you are fired "without cause" are you eligible for unemployment payments.
- HeyLaughingBoy 15y ago
  If you quit you are not eligible for unemployment. Let's be careful about this. It depends on the reason you quit. If you were being harassed and the company did nothing about it, or you had unsafe working conditions, etc, you can still collect. It's better to say that if you quit for reasons that have nothing to do with the employer, you cannot collect unemployment. I had a co-worker who quit because the raise he was promised (in writing) at hiring time never materialized. The company had to pay unemployment while he looked for work.
  - gwright 15y ago
    Good point. Thanks for the meta-clarification.
pkteison 15y ago
The employee files for unemployment insurance regardless, lying and claiming they were laid off. You file a dispute, claiming they were terminated for cause. The unemployment office makes it quite clear that you will lose your dispute and should drop it. You refuse, because you have a good clear case where clearly this guy was fired for cause. You present your good clear case, and you lose anyway, and the person fired for cause still gets unemployment, and your unemployment insurance rates go up. That's just how it works. It's not how it's written, and it's not how it's supposed to work, but it's how it works.
- adient 15y ago
  I find it odd when people create such strange generalizations in their head. Whether this comment is from your own anecdotal experience or not, it is just plain wrong as a general matter. Defeating an unemployment appeal is certainly possible and not that difficult if you've done your due diligence during the process.
- riverlaw 15y ago
  You are wrong. I won every case (~5) filed against me over ~3 years working at Tech Support. If you have proper documentation as to why you fired someone you do not have to pay unemployment insurance.
  - pkteison 15y ago
    I'm flat out wrong? I see your anecodote and raise you a statistic: "In 2009, employers filed 405,153 appeals to deny benefits to former workers and 36% won, a figure that hasn't changed too much in recent years, according to the U.S. Department of Labor." Wall Street Journal "Feeling Blue about Pink Slip Taxes" http://online.wsj.com/article/SB10001424052702303960604575158214061078180.html http://online.wsj.com/article/SB1000142405270230396060457515... 36% won. So 2/3rds of the time (read: most of the time), employee wins. By all means, still appeal. But odds are not fantastic. Plan on having to pay out some unemployment that you shouldn't have to. A written employee handbook and records showing when policies were violated will save you some money sometimes, but don't count on it. You can fire employees, for cause, and still see your insurance go up, even with an appeal.

ctdonath 15y ago

"2. If I fire an employee, a portion of the cost of that person's unemployment claims is charged back to me." Can you elaborate on this? It's something I've long heard and failed to grok. How can an employer, as normal business practice, have to still pay a fired employee any amount?

SoftwareMaven 15y ago
You have to pay for unemployment insurance. The more people who make claims against you, the higher your insurance gets. You probably aren't going to get charged 100% of the employee's unemployment, but you get charged a goodly chunk.
- philiphodgen 15y ago
  That's exactly right. For unemployment insurance you pay a percentage of your payroll to the government. The percentage depends upon the number of claims your ex-employees have put on the pool of money in the unemployment insurance scheme. More claims means a higher percentage. That makes the cost of a replacement employee higher because you're paying for the cost of prior employees' unemployment claims when you are making unemployment contributions for the new employee.
  - chopsueyar 15y ago
    You act like this was an unknown cost of having employees.
- deleted 15y ago
  [deleted]
- dualogy 15y ago
  Seriously? I'm surprised anyone is still hiring at all in the US! Sheesh, what a policy. "Hello independent contractors" -- I hear you.
  - larrywright 15y ago

temphn 15y ago

This law will be written in a week by Whitehouse interns without any experience running a business or employing individuals. And it will be constructed to be applicable across vast swaths of the US economy, or else it would not be "stimulative". And this administration's previous attempts to meddle in business resulted in the largest VC loss in history, namely Solyndra. What could possibly go wrong?

teyc 15y ago

Hi Phil, I've been following your blog about US taxes, but didn't know you post at HN. Small world. I also have my doubts about this program. Employers are humans, and humans never associate "quality" with "discount". Right now, the people who are unemployed face the real risk of exiting the economy altogether, along with their knowhow, and this will cost the economy as a whole in the long term. Meanwhile, businesses are not going to hire if the consumers aren't there. The problem with trying to restart the economy with government stimulus is that people are maxed out on their debt. The debt is acting like a sponge, sucking out any additional money that come from the government. The NPR Planet Money talked about how Japan's economy entered its longest growth period post the crash when the PM forced the banks to clean up its bad loans and recapitalize. Subsequently, government stimulus started to take effect. The government has been reluctant to do this, and it will cost the US in terms of its economic dominance as competing countries race ahead on its capital. I believe any government money is better spent not trying to put people back in employment through incentives, but instead keep these people "engaged" in the economy. Be it through reimbursement of expenses in attending job interviews - fuel is expensive when you are out of work; Making the pool of "consultants" and "contractors" that you allude to more visible. The mainstay of jobs post crash is going to be a small pool of permanently employed plus casualized, short term contract work. The sooner the government recognizes this, the better.