Unemployment insurance can be a vital lifeline, especially during a pandemic, but not every worker who loses a job is entitled to benefits. Workers who are fired for misconduct, for example, or who quit their jobs without good cause usually aren't eligible for unemployment. While the state has the final say as to whether a claimant receives benefits, employers have a considerable amount of power too.
When a former employee files for unemployment benefits the state will consider information from employers regarding wages and the reasons that the worker is no longer on the payroll. Under most circumstances, employers can contest a claim for benefits and even appeal when benefits are awarded.
Both employers and employees pay taxes that fund the unemployment benefit system. For employers, how much they pay depends on the amount of unemployment benefits that are paid to their former employees. That means employers can save money by successfully contesting an unemployment claim.
But employers cannot and should not fight every unemployment claim filed by a former employee. Rather, they need to distinguish between claims that are eligible and those that aren't. That way, former employees who are entitled to benefits get the help they need, and employers avoid wasting time and energy contesting valid claims.
At the outset, one of your primary goals should be to foster an environment in which firing an employee is not a common occurrence. This can be accomplished in three steps.
Early in the process you need to evaluate the strength of your former employee’s claim and determine how to contest it in your state. Gather documents and talk to witnesses ahead of time because there are procedures that you will need to follow once the claim is made.
In New Jersey, for example, the state will send you a request for separation and wage information, which it will use to determine whether your former employee is eligible for benefits.
Once a determination is made by the state, an employer who wishes to appeal has ten days to:
Every state has its own set of rules and procedures, so the sooner you become familiar with your state’s program the better off you'll be.
After an employer receives a notice that a former employee has filed for unemployment, the employer has only a limited amount of time to contest the claim. In many states, the deadline is 10 days. If the claim is approved, the employer has a short time to decide whether to appeal—between 10 and 30 days is typical in most states.
An employee who quits or resigns is not eligible for unemployment benefits unless the employee leaves for good cause. In general, good cause requires a compelling reason for the employee’s departure, such as:
In some situations, an employee can also quit to relocate for medical or family reasons, but good cause normally requires proof that the employee’s health or safety was in jeopardy. An employee who quits to return to school or because there is no room for advancement normally does not qualify for benefits.
One way to prove that your employee voluntarily left without good cause would be through a resignation letter. If your employee quits and the letter fails to provide a qualifying reason, you might be able to use it to fight the claim.
An employee who is fired for misconduct is generally not eligible for unemployment benefits. What constitutes misconduct depends, to some extent, on your company's internal policies, although criminal behavior, substance abuse, fighting, and actions that jeopardize the safety of the worker almost always qualify. In some states, consistently showing up to work late or taking unjustified absences could be considered misconduct as well.
It's important to differentiate between misconduct and an employee’s shortcomings. It is one thing, for example, to fire an employee who willfully fails to return client phone calls, misses meetings, and breaches client confidentiality. It is quite another to let someone go who tries hard and follows company policies but fails to get the best results for clients or customers.
As noted above, documenting violations of work rules is essential to establishing an incident or pattern of conduct that warrants termination.
At the end of the day, you need to do what makes sense for your company. This could mean refraining from contesting an unemployment claim even if you have a valid basis to do so. Consider whether the individual has ties with workers who remain with your company, and how that might impact workplace morale. Look at the big picture and determine whether the possible cost savings make it worth the time, expense, and practical consequences of contesting the claim.