How to avoid paying for wrongful unemployment claims

avoid paying unemployment 556x400No one would stand in the middle of the street and set their money on fire (hopefully). That’s what happens when ineligible employees collect unemployment benefits. Employers must be careful to avoid paying wrongful unemployment claims.

There are a few ways this can happen. For example, mistakes made filling out paperwork could make a former employee appear eligible when they, in fact, are not. Additionally, poor documentation could cause you to lose an unemployment insurance case that you otherwise should have won.

However, there are steps you can take to prevent unwanted and invalid benefits charges to your account.

Document the reasons for termination

States send you paperwork asking about an employee’s termination. You should answer each question in detail. The answers depend on why employees left. Employees may leave for one of three reasons: they were fired for misconduct, they voluntarily quit, or they were laid off.

When you fire an employee for misconduct, answers should explain the company policy violated, the number of times the employee violated it, the verbal and written warnings employees received, and the chances they had to modify their behavior. The basis for misconduct discharges is sometimes poor performance. Keep detailed information here also, along with the chances employees had to improve. Discharges for poor performance (e.g., too many late arrivals) usually don’t disqualify employees from benefits.

Employees who are laid off usually qualify for benefits.

Lingering liability after an employee leaves

Employees who leave on good terms (or at least mutually agreeable terms) can apply for benefits if their new jobs don’t work out. This puts a premium on articulating the reasons they quit, since your company may remain a chargeable, base-period employer for several years.

  • Did they leave for better jobs?
  • Did they feel forced to quit because their job duties changed or they had other problems, perhaps with their managers?

You’ll be able to answer these questions through an exit interviewer’s documentation. Keep resignation letters in employees’ personnel files.

Pay careful attention to the necessary paperwork

You just can’t make up answers on state forms. Employees’ misconduct or substandard performance should be reflected in contemporaneous documentation placed in their personnel files by their managers. Exit interviewers should query employees about their new employers, new positions, titles, and pay rates. If employees indicate they felt compelled to quit, exit interviewers should determine the steps they took to alert management to those problems and the steps management took to improve the situation.

A few mistakes make fighting an unemployment case even harder

State unemployment laws are principally designed to aid employees, not employers. Under most state laws, there are only a few ways employees can be disqualified from receiving benefits. They can be fired for work-related misconduct or voluntarily quit without good cause attributable to the job. The deck, therefore, is stacked against you going in if you’re attempting to avoid paying unemployment benefits.

Still, there are times when a former employee should be ineligible. However, regardless of the reason for an employee’s termination, certain actions you take can make an unemployment claim even harder to beat than it already is.

Failing to define the parameters of the termination.

Employees who are fired due to misconduct can still qualify for benefits because your definition of misconduct often isn’t the same one the state uses. You stand a better chance of prevailing if you present contemporaneously written proof of misconduct: warnings, performance appraisals and employees’ continued failure to correct their behavior. Even making all the right moves, employers still lose misconduct cases two-thirds of the time.

Employees may quit, but they may not see things the same way. They may say they were forced to quit; in other words, they had good cause to quit. These claims usually involve employees’ managers. You can dispute a good-cause case by asking employees to participate in exit interviews. Then corroborate the information with their colleagues. If it turns out employees were right, it’s an opportunity to correct the manager’s behavior.

Failing to present the best witnesses and evidence.

Hearing officers and unemployment review boards give the most respect to firsthand testimony from witnesses with direct, personal knowledge of the events surrounding a termination. Although it may disrupt business to have witnesses testify, it’s better than losing the case, which is almost certain to happen otherwise. Because of the pandemic, odds are the hearing will be remote, which is less disruptive to employees’ work days.

Missing a protest deadline.

Employees go down to their local unemployment office and apply for benefits, which you can then protest. All states have cutoff times for you to protest these applications. Miss a deadline and employees will receive benefits, whether or not they’re entitled to them. You also give up your right to dispute charges to your account and avoid paying for unemployment benefits. If you need more time to gather information and witnesses, make a quick, written general protest stating you’ll provide more information shortly.

Additional Resource: See more on specific cases where employees may be ineligible for unemployment benefits.