May 28, 2020

Minimizing Costs for Restaurants

In honor of National Hamburger Day, we are addressing some unique struggles facing restaurants across the country. The response to the pandemic has provided our favorite establishments with a winding road to reopening.

Restauranteurs are grappling with reopening amid capacity restrictions and an increased cost for food. The financial impact of those challenges cannot be controlled, but there are other costs that can be minimized.

Every state has a trust fund for unemployment benefits, which is financed by employer taxes. Since a record number of people have filed for unemployment, there will need to be a plan to replenish those funds. Each state will determine the impact this will have on employers. Here is what we know today.

How States are Responding

Nineteen states have said they will not charge employers for COVID-related unemployment claims. Five states have said they will charge employers as they normally would, and the remaining states have not yet decided.

Even if you operate in a state that will not charge employers directly for unemployment benefits, you will be charged indirectly, via a surtax. Either way, the unemployment tax rate will go up in 2021, but here are some cost-saving measures you can implement now.

What You Can Do Now

  1. Examine your unemployment tax rate. Ninety percent of employers are not at their lowest UI tax rate. If you are not at the lowest rate for your industry, in each state that you operate — it could be very costly.
  • Audit your unemployment benefit charge statements to ensure that COVID-19 related claims are not included in the experience rating. Although a handful of states will charge employers regardless of whether or not unemployment benefits are related to the virus, many states are not.
  • Be sure to document return-to-work offers. Employees who are currently receiving unemployment because of the virus, could continue to be eligible through the end of the year. Because unemployment benefits can be more than an employee’s wages, re-staffing could be a challenge. Without a valid reason though, an employee who refuses an offer to return to work is ineligible to receive unemployment. Valid reasons are defined in the CARES Act. It is recommended that employers make return-to-work offers in writing, and document refusals. This is to object any potential chargebacks.

Unemployment information is changing rapidly. With decades of experience, we can help your company navigate these changes — while you focus on putting delicious food back on your tables. Contact us today for a free rate assessment at 301-355-6249 or by email at