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Challenging more unemployment claims? You’re not alone

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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 their former employers. That’s 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.

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. 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.

Stimulus law will add to the rolls

The stimulus law signed Feb. 17 could make 500,000 more Americans eligible for unemployment benefits. Reason: It gives financial incentives to states to give benefits to new categories of unemployed workers, including people in training programs, those looking for part-time work and people who left their jobs for a “compelling family reason,” such as domestic violence or the illness of an immediate family member.

Some states already offer such generous eligibility guidelines. But other states, eager to get their share of federal stimulus dollars, are expected to expand their coverage in the coming months.

Free report: "Handling Unemployment Claims the Legal Way." Access this free white paper at www.theHRSpecialist.com/unemployment.

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