Should we contest? Fired for poor work, former employee now wants unemployment

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

Q. After repeatedly warning an employee about her poor performance, we recently terminated her. At the termination meeting, she complained for the first time that she felt she’d been held to higher standards based on her gender. She has now filed for unemployment benefits. While we don’t think she’s entitled to the benefits, we wonder whether it makes sense to fight her claim. What do you think?

A.
In Minnesota, employees are entitled to unemployment compensation benefits if they are terminated for reasons other than misconduct or if they quit for some good reason attributable to the employer.

It’s difficult to contest a former employee’s right to unemployment benefits if the employee was terminated for garden-variety performance reasons. That being said, an employee’s failure to comply with repeated warnings can support an argument that the employee committed misconduct that disqualifies her from receiving benefits.

Some employers mistakenly believe the only adverse consequence of contesting unemployment benefits applications is the possibility of losing and having to pay the benefits. But those employers are only seeing part of the cost picture; they’re missing the high potential for expensive litigation.

You should always carefully review how likely you are to be successful if you decide to contest unemployment benefits. In addition, consider the practical reasons to either contest or not contest benefits.

On one hand, successfully contesting an unemployment claim can save money. On the other hand, contesting an unemployment benefits claim can increase the likelihood of a legal claim by the former employee. If that happens, be prepared to pay more in legal costs than you would have by not contesting the unemployment claim.

Another downside of contesting the claim:
An unemployment hearing provides the employee and the employee’s attorney with a free discovery process, revealing the employer’s litigation strategy should a case arise in civil court. This may be harmless if the employer has a solid defense to any legal claims and can ably prepare witnesses to perform well in the unemployment proceedings.

However, there are situations in which it may not make sense to participate in an unemployment benefits hearing.

For example, an employer may increase its chances of litigation if it doesn’t have solid defenses to a possible legal claim, and witnesses may not perform as well in the context of an abbreviated unemployment hearing conducted without the full discovery available in a court matter.

Carefully weigh those pros and cons when deciding whether it makes both legal and practical sense to contest unemployment benefits.

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