Unemployment benefits don't hit your bottom line.

A lawyer friend from a nearby firm popped his head in my office door a few days ago.

He wanted to know how his recently-former employee’s claim for unemployment was going to affect his firm’s finances.

This question comes up now and then, but not from other lawyers. In talking to him, it became obvious that, even though he was a lawyer, he had no clue about how the unemployment insurance system worked. Of course I have no idea how divorce proceedings work and he would know that process cold. To each their own.

His employee had been with the firm for years. She quit to take a new job. It didn’t work out, so she left that job and then filed for unemployment compensation. My friend got a notice from the Ohio Dept. Of Job and Family Services telling him that his former employee was going to be collecting benefits. He was worried that he would be paying her directly.

I assured him that the system doesn’t work that way. When she was working for him, and even now, he pays into the unemployment insurance program at least quarterly. His payments are based on the size of his payroll and the risk that his employees will need to partake in the system. If he laid off or fired more people than other industries or employers, then he was a higher risk, and paid a higher premium. Conversely, by keeping people at work for a long time, he would pay less.

He wondered aloud, again, if he’d get a bill for her claim.

No sir, I said. You have already paid your premiums. The DJFS was just letting you know that a claim was being applied to your account. Probably because she had not been with her most recent employer long enough to secure benefits from his policy. Her leaving his office earlier in the year wouldn’t change his risk rating; the DJFS doesn’t hold quits against employers, and her benefits will be paid to her from the insurance pool he had already paid into. Her benefits would not touch his bank account or bottom-line.

This satisfied my colleague. He bid me thanks and a good afternoon. I did my good deed for the day. Back to work.