Seasonal Business and Unemployment

Most of the campgrounds and recreational facilities our company runs are seasonal, meaning that they are only open from late-Spring to early-Fall.  Many are at high altitude, and are under 10+ feet of snow this time of year, so that they couldn't be kept open even if there was any customer demand.

The problem with this business model is that it tends to saddle us with a huge unemployment tax bill.  For those that don't know how unemployment taxes work -- and I certainly didn't before I got into this -- each time someone files for unemployment, the business is sent a notification.  If the person was fired for cause, or quit when work was available, and the business can prove it to the state, then the person is either denied unemployment or your business is at least not hit with the cost. 

In any other case, the person will get unemployment, and your business "experience" account is hit for your proportional share of that person's payments -- if you provided them with 100% of their employment the last couple of years then you get 100% of the cost.  Each year your tax rate (a percent of wages) is reset based on your experience account - so more unemployment claims by your ex-employees drives higher tax rates.

Even before recent problems I will describe in a moment, I have always felt that unemployment tax systems unfairly punish seasonal businesses.  Unlike at another company where a person might think they are getting a permanent job, then get laid off, my employees join in March and accept the job knowing that the job ends in September.

Well, I could live with that problem- we get hit with a month or two of unemployment until folks find another job.  Unfortunately, we now have a much worse problem, particularly in California (of course). 

Many of the people we hire are full-time RVers, meaning that they no longer have a permanent home, but roam about the country all year in their RV (I wrote about this trend here).  They work for us in the summer, and then many of them vacation all winter in places like Arizona and Mexico.  Unfortunately, many of these folks, particularly Californians, are filing for unemployment all winter while they play.

Now state rules, including those in California, require that folks applying for unemployment be looking for work, and so certify on a regular basis to the state.  However, a number of our folks are, I hate to say, lying about this.  I know of at least one pair who are on California unemployment and are not even in the country right now.  As a result, in California in 2005, I will be paying nearly 7% of wages in unemployment taxes, and the state of California will be paying in additional money from other sources, to help fund these people's winter vacations.

This really, really is irritating me, and I don't know what to do about it.  I have called the state of California on several occasions, but as long as the employee says they are looking for work, the state can't, or won't, do anything about it.  Some really annoying person at the state unemployment office told me that it was my fault, that my business should learn to plan better and this is the cost I pay for messing with people's lives by laying them off. 

Unfortunately, this "the business is evil, the employee is always right" attitude permeates nearly every state labor-related agency I have ever dealt with.  About a year ago I fired an employee for chasing a customer around with a baseball bat -- I even had a letter from the customer testifying to the whole sorry story -- and the state employment department refused to certify that the employee was fired for cause and our experience account got hit with all of the unemployment payments for this individual.

  • http://azpnj.blogspot.com Dave

    I was talking to my dad about your situation and he mentioned that some states have a seasonal employment provision that prevents people from collecting unemployment during the off season. Arizona used to have it (he hasn't kept up in recent years so he's not sure if it's still in place).