10 unemployment compensation factors that affect payouts

How much your organization pays for unemployment insurance is based, in part, on how many 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. If you don’t give departing workers grounds to claim unemployment benefits, you’ll pay them far less frequently.

Here are 10 things you should know about unemployment claims:

1. You must understand your state’s unemployment laws. They vary from state to state, so if you operate in multiple states, you’ll need to know several sets of rules.

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

3. Slackers often qualify. An underperformer who’s fired for chronic tardiness or missing deadlines could successfully argue that she did her best and didn’t try to let down the firm. Unless you can prove she was intentionally doing a bad job, she will probably be eligible for benefits. Tip: Blame termination on something other than “poor performance.” Someone fired for “deliberate and willful misconduct” usually won’t get unemployment.

4. Patience matters. Document that you tried to keep the employee by offering counseling and issuing warnings. A worker who ignores repeated warnings usually won’t get benefits because that’s deliberate misbehavior. Tip: Be specific when describing the problem that led to the firing.

5. Documentation wins appeals. Your employee handbook should list specific breaches of conduct and assign penalties that include possible dismissal. Remember, you must uniformly enforce your policies.

6. The employee’s boss carries more weight than HR. Unemployment officials want to hear from the supervisor who witnessed the former employee’s misbehavior—not from someone in HR.

7. Calling someone a “contractor” won’t help. Real contractors can’t collect unemployment. But you can’t escape liability by assigning a “contractor” label to someone who worked on site, under your supervision, at hours you prescribed. That’s an employee—who is eligible for benefits.

8. Current tenure is important. In most states, once an employee has worked for you for 30 days, you become the “chargeable employer” for unemployment purposes. Even if the employee previously worked for another organization for 10 years before joining your company, you will be charged if he or she has worked for you for 30 or more days.

9. The last day tells the tale. Officials want to know a specific incident that caused you to terminate. It shouldn’t be some minor straw that broke the camel’s back. Tip: If you fire someone, do it on the day he deliberately violates a policy or willfully ignores job duties.

10. Some workers are better unemployment comp bets. Students and teachers make great temporary employees in part because they’re typically ineligible for unemployment benefits following 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. Even if they work more than 30 days for you, they won’t be able to collect unemployment when the job is over.