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Downsizing? Transfers cut unemployment claims

by on
in Employee Benefits Program,Human Resources

These are tough economic times and lots of employers find themselves having to make difficult financial decisions. When those decisions include shutting down a store or branch location, employees who lose their jobs may be eligible for unemployment. But when former employees collect unemployment, unemployment insurance costs go up for employers.

In the best of all possible worlds, employees find other jobs. That way, they stay employed and don’t have to go on unemployment.

One way to cut your potential unemployment comp liability is to offer the employees a transfer to another location. Those who turn down the offer—provided the new job has similar benefits, pay and duties—may not be eligible for unemployment compensation, and thus won’t affect your unemployment insurance costs.

Recent case: Becky Sutton worked for about five years as a store manager at a Clean N Press in Blaine. When her supervisor told her that location would be closing, he offered her a similar job at the same pay and with the same benefits, but working at several other branches.

She quit instead and applied for unemployment benefits.

The company appealed her benefits, reasoning that she didn’t have a good reason to quit because the job she was offered was an equivalent one. Plus, the company argued, the other locations were just a few miles farther from her house than the closed location. Her old location was five miles away, while the other two were 12 and 14 miles away.

The Minnesota Court of Appeals said she wasn’t eligible for benefits. It said the additional driving distance was not enough to “compel an average, reasonable worker to quit and become unemployed rather than remaining employed.” (Sutton v. East Metro Clean N Press, No. A09-130, Minnesota Court of Appeals, 2009)

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