Q: How do letters of reasonable assurance reduce unemployment compensation costs?
A: Issuing a Letter of Reasonable Assurance (LRA) to noncontract employees, including substitutes, is a loss-control practice for school districts to protect against employees filing unemployment claims over scheduled breaks (summer vacation, winter break, Thanksgiving, spring break, etc.). This practice helps districts reduce annual budget for compensation costs and saves administration time in processing and paying unnecessary unemployment claims.
All district employees and substitutes are eligible to file for unemployment benefits with the Texas Workforce Commission (TWC) upon separation from employment and may be able to file for benefits during a scheduled break.
The TWC treats employees filing unemployment claims on breaks as laid off since this is a temporary work stoppage, although the employee has not been fired or quit. However, employees can’t receive unemployment benefits chargeable to the district if it can prove an LRA was issued to the employee. The LRA is the evidence notifying the employee is reasonably expected to return to work after the scheduled break.
The LRA is not a guarantee of future employment or a contract; it is a statement that there is a reasonable expectation—at the present time—that a position will be available when school resumes for noncontract employees who work less than 12 months.
The LRA should be issued in early spring to all noncontract employees who work less than 12 months. This allows time for employees to sign and return the form before the school year ends. It’s also a good practice to issue an LRA to newly hired noncontract employees and anyone who may have an unpaid break. Making this part of the hiring process will make sure school districts complete, year-round protection from unemployment claims.
The LRA should be signed by the employee and returned to the district. Without a signed letter, unemployment benefits may be charged back to the district. The signed form should be kept on file and attached as documentation when responding to unemployment claims that fall during summer break or over holiday periods.
Districts responding to all unemployment claims in a timely manner and providing supporting documents, like an LRA, are more likely to have the claim denied.
Luz Cadena has worked as a compensation consultant with HR Services since 2006. Prior to TASB, she worked for a Central Texas ISD for eight years in the positions of compensation analyst, compensation coordinator, and director of compensation.
Cadena earned an associate degree in business administration from New Mexico State University, holds a bachelor’s degree in business management from Concordia University in Austin, and is a certified compensation professional (CCP).
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