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Record number of employers dispute unemployment claims

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in Employee Benefits Program,Firing,Human Resources,Leaders & Managers,Performance Reviews

When you fire an employee for misconduct and he proceeds to file an unemployment compensation claim, how does your organization respond? In recent years, record numbers of U.S. employers have challenged those payouts.

Twenty-six percent of people who applied for unemployment in 2007 saw their rights to benefits challenged by employers, more than double the number from 15 years ago.

Most unemployment compensation programs—which are administered by the states—say employees who quit voluntarily or are fired for misconduct are ineligible for unemployment benefits. Poor performance doesn’t usually count as “misconduct” that disqualifies unemployment benefits.

Benefit to challenging: If you successfully dispute an unemployment claim, you save money because your unemployment insurance rate is based on the amount of benefits your former employees collect.

The rise in challenges can be pegged to more employers citing misconduct as the reason for terminations. In fact, the proportion of claims challenged on the basis of misconduct has more than doubled since the late 1980s. Misconduct claims have historically accounted for about half of all challenges but now account for about two-thirds. Claims that the employee voluntarily quit represent the other third. 

One reason for more misconduct challenges: Over the years, state court rulings have expanded the definition of “misconduct,” making it easier for employers to wipe out their jobless claims.

Plus, employers’ quest to keep unemployment costs down has created an industry of third-party agents that help employers administer their unemployment insurance challenges and paperwork.

Free report: “Handling Unemployment Claims the Legal Way.’’ Access this free whitepaper, which includes advice on managing unemployment hearings, at www.theHRSpecialist.com/unemployment.

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