By Cynthia Mergele
Padgett Stratemann & Co., SPHR,PI
On the face of it, responding to an unemployment claim seems simple enough — answer a few questions and provide the reason why the person is no longer employed by your company. However, many employers are frustrated by the lack of success they experience in “winning” claims, and this level of frustration is heightened at year-end when they receive the new increased unemployment tax rate for the coming calendar year.
It’s critical that employers realize there are two different types of notices that have unemployment tax implications — “Employer Notice of Unemployment Claim” or “Notice of Maximum Potential Chargeback.” The unemployment claim is sent to the employer who is indicated as the former employee’s (“claimant”) last employer. The chargeback notice is sent to all employers who are showing wages during the base period (the period of time used to determine benefits). Employers frequently ignore chargeback notices, not understanding that while their response will not affect whether or not the former employee receives benefits, a “successful” response could prevent the employer for being charged for any unemployment benefits attributed to their respective chargeback period.
The most important facts to consider regarding unemployment claims are the basis for what determines an applicant’s disqualification for benefits. Individuals that are out of work through no fault of their own (layoff, reduction in force, etc.) are considered qualified for benefits. Employees who quit voluntary would be considered disqualified. But a word of warning — offering the employee the opportunity to quit to avoid being fired is not voluntary! Discharge for misconduct related to work is also cause for disqualification, but employers have to be clear that misconduct occurred — in very simple terms, the employee did something wrong that they knew was wrong and (in most cases) was warned and given the opportunity to correct the issue. An employee’s inability or lack of skill in performing their work is not misconduct.
Claimants who are paid wages in lieu of notice will be disqualified for benefits for the period of time in which they continue to receive these wages. Also, claimants who are receiving workers’ compensation or a retirement pension would be disqualified for benefits.
Success in winning claims is in the documentation and facts provided. The easiest way to prove employees are aware of the rules is to show evidence of a written policy and the employee’s receipt of the policy — a signed acknowledgement of receipt of an employee handbook and a copy of the policy from the handbook which shows the policy violated. Evidence of counseling of earlier violations is also critical to include statements provided to employees that communicate the consequences of future violations to include termination. Providing information regarding witnesses is imperative. Employers should avoid “muddying the waters” with issues that are not related to the reason for the termination. And while last, but not certainly not least important, try to avoid delays of time between the final violation and the termination. If there is a delay in time between the date of the final offense and the termination, show a good business reason for the delay — whether it was time needed to conduct an investigation, or the fact that the supervisor was away. Not providing valid reasons for these types of delays can have detrimental impact on employers successfully defending claims.
Unemployment claims can be costly. For 2014, the highest unemployment tax rate is 7.41% and the average rate is 1.66%. For a company with 100 employees, the difference in rates represents an additional tax of $51,750!
Employers need to be deliberate, diligent, and timely in responding to unemployment claims and chargeback notices. They should also consider seeking the support of legal counsel if they have concerns with litigation, as information provided on unemployment claims is subject to discovery.