Will this year’s layoffs drive up your unemployment tax costs?
When organizations face the difficult decision to lay off employees, the focus often centers on risk to the brand and business continuity as well as compassion and communication with those exiting. But there’s another critical factor that deserves equal attention: unemployment cost management.
Outplacement services not only help employees move forward with their job search and emotional recovery; they also play a key role in reducing the financial burden on employers. By shortening the time former employees spend on unemployment benefits, outplacement can significantly lower related costs and stabilize future unemployment tax rates.
How Outplacement Supports Unemployment Cost Management
Unemployment tax expenses can increase rapidly following layoffs. With the average unemployment claim costing an estimated $4,200 to $12,000, the financial impact of layoffs really adds up, especially when they happen frequently.
How Employers are Taxed for Unemployment Insurance
At the federal level, organizations pay unemployment tax on the first $7,000 of each employee’s wages, typically at an effective rate of 0.6%. State taxes, however, are experience-rated. The more former employees file unemployment claims, the more your organization’s tax rate increases.
How to Reduce Unemployment Claim Duration
The sooner a former employee lands a new job, the sooner their unemployment claim ends, thus minimizing the immediate financial impact on your organization. Helping employees find new jobs faster also helps protect your organization’s state experience rating, which in turn keeps future unemployment tax rates from rising too dramatically.
One of the most direct ways outplacement services help manage unemployment costs is by accelerating the reemployment of laid-off employees. Job seekers who receive professional outplacement support find new roles more than 2.5 times faster than those who go it alone.
Other Cost-Reducing Effects of Outplacement
Mitigates the Risk of Legal Action
Even when layoffs are handled lawfully, they can trigger emotional responses—such as anger, anxiety, and confusion—that sometimes lead to legal action. Unfortunately, unfair dismissal is one of the most common causes of employment law claims, and they can be both costly and time-consuming. Outplacement services help mitigate this risk by providing affected employees with a structured path forward.
When individuals feel supported and empowered to move on, they’re less likely to dwell on grievances or pursue litigation. The emotional support they receive via outplacement not only protects your legal expense budget; it also accelerates reemployment, which in turn supports effective unemployment cost management.
Improves Rehire Potential
How you handle layoffs can influence whether employees are open to returning. Those who leave on good terms, including those still receiving unemployment benefits, are more likely to come back if the right role opens up. According to the Society for Human Resource Management (SHRM), the offboarding experience plays a crucial role in shaping rehire potential. And since people often share these experiences, treating employees well during a layoff can also boost morale and engagement among remaining staff.
Protects Morale and Retention Among Remaining Employees
Layoffs don’t just affect those who leave; they can send shockwaves through the entire organization. Research has found that when employees are laid off, those who remain are more likely to quit and experience a sharp decline in their employee experience, including lower motivation, pride in their employer, and willingness to recommend it to others.
Offering outplacement services demonstrates to current employees that your organization values its people, even during difficult transitions. This visible commitment can help maintain engagement, reduce turnover, and sustain productivity, ultimately helping you avoid further layoffs and the associated unemployment costs.
Strengthens Employer Brand and Reputation
How your organization treats employees during a layoff is visible to everyone, including current staff, future candidates, customers, and investors. A poorly handled layoff can damage your employer brand and lead to negative reviews on platforms like Glassdoor and Indeed. On the other hand, offering outplacement services demonstrates corporate responsibility and care, which positively supports your brand reputation.
According to Gallup, employees who leave on good terms are nearly three times more likely to recommend their organization to others. And in our Relocation & Job Seeker Survey, 90% of professionals said they wouldn’t work for a company with a bad reputation. A strong employer brand helps you attract great people who are more likely to stay long-term, resulting in fewer tough decisions, such as layoffs, and better control over long-term unemployment costs.
Make a Strategic Investment in Unemployment Cost Reduction
Layoffs are never easy, but they don’t have to be financially devastating. Outplacement services offer a powerful way to manage the emotional, reputational, and financial aftermath of workforce reductions. By helping former employees land on their feet faster, reducing legal risks, and protecting your brand, outplacement becomes a vital component of smart unemployment cost management.
IMPACT Group’s compassionate, results-driven outplacement services support your people and your business. Whether you’re conducting a large-scale restructuring or a small team reduction, we’re here to help you manage the transition with care and with your bottom line in mind. Contact us today to discuss how our outplacement solutions can support your organization’s goals.
Interested in learning more? View our guide on selecting the best outplacement services for your needs.
