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Smarter firing leads to fewer unemployment payouts

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in Compensation and Benefits,Firing,Human Resources

by Scott Cruz

How much your organization pays for unemployment in­­surance is based, in part, on how many of your former employees have successfully filed claims against you. Under­standing who is eligible for unemployment benefits and who isn’t can go a long way toward keeping insurance rates low.

It starts with how you terminate an employee.

Here are 10 things you should know about unemployment claims:

1. Unemployment rules and laws vary from state to state, and they’re full of nuances that aren’t obvious until a former employee files a claim. Tip: If your company operates in multiple states, know the differences in unemployment insurance law from location to location.

2. Employees who quit can often collect unemployment. If a worker quits because you changed working hours or locations, state unemployment insurance officials may deem the termination an “employer-caused discharge” and approve benefits.

3. Slackers often receive benefits. An underperformer who’s fired for chronic tardiness or missing deadlines could successfully argue that she did the best possible work and did not deliberately let the firm down. Unless her boss can prove she was intentionally doing a bad job, she will probably be eligible for benefits. Tip: Characterize termination as something other than “poor performance.” A dismissal for “deliberate and willful misconduct” can usually rule out unemployment payments.

4. Your patience matters. It’s fair to suggest that a worker who ignored repeated warnings deliberately misbehaved and does not deserve unemployment compensation. Tip: Be specific when describing the problem that led to the firing. Document what you did to try to keep the employee, like counseling and issuing warnings.

5. Documentation wins appeals. Make sure your em­­ployee handbook lists specific breaches of conduct and assigns penalties that include possible dismissal. Uniformly enforce your policies.

6. The employee’s boss carries more weight than HR. State unemployment officials want to hear from the supervisor who witnessed the former em­­ployee’s misbehavior—not from the head of HR, who probably heard about it secondhand.

7. Calling someone a “contractor” won’t help. A worker has to be an employee to qualify for unemployment checks. That’s decided by when, where and how a person works, not what you call him. Simply assigning a “contractor” label to someone who worked on site, at hours you prescribed and on projects assigned by a supervisor won’t fool the state official who is determining the person’s eligibility for benefits. Tip: Properly classify the people who work for your organization as “employees” or “contractors.”

8. Tenure is important. In most states, once an employee has worked for an organization for 30 days, that company is considered the “chargeable employer.” That’s who is responsible for paying unemployment benefits. Those 30 days don’t have to be consecutive. So if you hire a seasonal worker for 15 days only, and then hire him back a few months later for another 15 days, he has a claim—even if he worked for multiple employers in between. Even if the employee previously worked for another organization for 10 years before getting a job with your firm, you will be charged if he has worked for you for 30 or more days.

9. The last day tells the tale. Officials want to know what happened on the day you fired the employee—not that he committed a minor infraction that served as the last of many straws that broke the camel’s back. Tip: If you fire someone, do it on the day he deliberately violates a policy or willfully ignores his job duties.

10. Some workers are better unemployment comp bets. In some states, teachers and students are ineligible for unemployment benefits during summer vacations and school breaks. If they are expected to return to school the next term, they’re not considered “unemployed” after they leave you. Tip: If that’s the case in your state, then teachers and students are smart hires for temporary and seasonal jobs. Even if they work more than 30 days, they won’t be able to collect unemployment when the job is over.


Author: Scott Cruz is a partner at the labor and employment law firm Franczek Radelet in Chicago (www.fraczek.com). Contact him at (312) 786-6570 or at sc@franczek.com.

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