In a sign of what may be in store for many U.S. employers the near future, ArgusLeader.com reports that South Dakota is charging private businesses $150 for every employee to help replenish the state’s unemployment fund.

According to the report, employers will pay an extra $36 million to the unemployment fund in 2010, in addition to contributing $26 million in standard unemployment insurance taxes. Some businesses will pay a surcharge on certain employees – mostly newly hired workers – for 2009's fourth quarter, bringing in an estimated $3.5 million by the end of January.

South Dakota law dictates that once the unemployment trust fund decreases to a specified amount, all private businesses are assessed a per-employee tax to replenish the fund. This is the first time many in the state can recall the statute going into effect.

For example, Midcontinent Communications – a communication company in Sioux Falls that employs roughly 500 people – will pay more than $70,000 to the unemployment insurance fund. Meanwhile, a Sioux Falls car sales executive estimates the surcharge will add about $75,000 in expenses to his company's payroll department.

A big increase in unemployment claims has led to an equally large decrease in the unemployment fund. In 2008, insurance benefits totaled a little over $25 million. This year, the Department of Labor (DOL) estimates that number will more than double to almost $63 million. Also, the number of South Dakotans receiving benefits quadrupled from 1,452 in the third week of June 2008 to 5,839 one year later.

With the cost of labor going up because of increasing unemployment claims, many businesses are using an Unemployment Claims Management Service to deliver a comprehensive program that relieves an organization from the stress of managing unemployment claims while also reducing risks and costs. Unlike other unemployment claims management services, Pre-Employ.com reduces claim-related costs at the initial level rather than at the hearing level, thus eliminating commonly assessed erroneous charges and immediately reducing unemployment claims costs. In addition, Pre-Employ.com offers an Unemployment Tax Service to assist tax and payroll departments in reducing employer tax liability.

The Unemployment Claims Management Service and Unemployment Tax Service are both part of Pre-employ.com’s fully-integrated suite of human resource (HR) solutions that includes background checks, drug tests, applicant tracking, job board systems, and I-9/E-Verify compliance. For more information on implementing a cost-saving program for managing unemployment claims, visit www.pre-employ.com, email info@pre-employ.com, or call 1-800-300-1821 to speak with a service representative.

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tahearn@pre-employ.com

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