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Business Operations

Unemployment Benefits: Considerations When Contesting a Claim

Whether unemployment claims are the bane of your existence or a routine part of your month, here are a few tips for successfully assessing and handling these claims.

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tire shop unemployment claims

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If you have ever fired an employee, then I suspect you have gotten a claim for unemployment benefits. And we all know that employers can easily lose an unemployment claim, even when you had a legitimate reason for termination! Whether unemployment claims are the bane of your existence or a routine part of your month, here are a few tips for successfully assessing and handling these claims.

Pay Attention to the Deadlines

Unemployment departments are notoriously unforgiving if you miss a deadline or file a late appeal. Immediately upon receiving notice that someone is claiming benefits, figure out when your response is due. Sometimes you will have a week or two; sometimes your response will be due tomorrow. If you miss a deadline, you can try to explain to the unemployment folks why you missed the deadline and why you should be allowed to dispute the claim, but it will be an uphill battle.

Know the Rules

When you first begin handling these claims, take some time to familiarize yourself with the basics of what will disqualify an employee from receiving benefits in your state and what will not. While the exact criteria vary from state to state, generally an employee who lost his job through no fault of his own is entitled to unemployment benefits. Thus, for example, there is usually no point in wasting your time arguing that an employee should not receive unemployment because she was laid off due to lack of work. Further, you should learn the procedural mechanisms of how a claim is typically handled in your state. 

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Will You Challenge the Request?

Before you make a decision about whether you want to dispute an unemployment claim, take a few minutes to think through the implications. There may be some circumstances where you decide not to contest a claim for benefits. For example, if an employee is terminated for performance after 20 years of faithful service, you might not want to contest that claim. Or if you think an employee may file a charge of discrimination or lawsuit against your company, you might not want to poke the bear by disputing her unemployment claim. On the other hand, if an employee was terminated for dishonesty, harassment, threats of violence or the like, fighting the claim is usually a good strategy. The point is to look at each claim and decide each on its own merits.

Be Detailed

You may not have the time, energy or inclination to write a dissertation in response to every unemployment claim. However, you must provide enough detail and documentation to allow the unemployment department to understand why you terminated the employee and why that decision was appropriate.

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For example, let’s say that you terminated an employee for falsifying company documents. However, the employee claims that he was never told that the behavior was against company policy and that everyone else does it. You need to be prepared for that argument. You will be in a stronger position to contest the claim if you have provided a written policy against falsifying documents and if you can produce documentation showing that the employee not only received the policy but was also trained on it. Providing yourself a foundation to dispute this type of claim is yet another reason why it is so important to have clearly written and widely distributed policies.

Detail, organization and documentation are even more important during the appeal of an unemployment claim. At that stage, you will need to provide copies of all the documents that support your claim or that you want to ask the claimant about. If you do not provide the information to the unemployment agency, the agency cannot and will not consider it.

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Be Complete and Consistent

Dance like no one is watching; write like your words will be shown to a jury. Take the time to think about and clearly explain the real reason for the employee’s termination at the time the termination occurs. Then, when you have to articulate the reason for termination, state the reason clearly and completely, and do not depart from it. It is not quite as simple as it sounds. For example, suppose you had a marginal employee and took advantage of a reduction in force. If all you tell the unemployment agency is that the employee was terminated because of a “reduction in force,” you may have difficulty using the “marginal employee” part later in the event of a charge or lawsuit. Even worse, the fact that you appear to be changing your story may be used against you. The reason you provide in response to the unemployment claim is your best opportunity to provide a truthful and complete reason for discharge that you can commit to for the long haul.

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Similarly, some states like Missouri and Minnesota require that a terminated employee be provided with the reason for termination upon request. In that circumstance, you would want to be similarly careful about providing an explanation for the employee’s termination.

Spell It All Out

Sometimes as part of a separation agreement, a terminated employee will be allowed to “resign” in lieu of involuntary termination. This can put the employer in a dilemma. Employees who voluntarily resign are usually not entitled to receive unemployment benefits, and your employee (who has actually been fired) is probably going to want and need it. But if you have to truthfully tell the unemployment agency why the employee was fired, you may be in breach of your agreement. The best way to deal with this problem is to preemptively address it in the agreement. The parties can agree that the employee will be allowed to resign and that you will tell most of the world, including co-workers and prospective employers, that the employee quit. However, the agreement should expressly allow you to provide the true reason for termination to unemployment agencies, other governmental agencies, and the courts if need be.

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Be Prepared for Questions

Particularly at the appellate level, you need to think about the questions that the unemployment agency and the former employee will ask you and have your answers ready. If your position is that the employee misused company time and equipment by spending hours of time on Instagram during the workday, then be prepared to talk through how you found out about this behavior, the company’s policy on use of electronic equipment, and what steps you took before terminating the employee. If you terminated the employee on the first offense, be prepared to explain why you believe this behavior is so severe that you had to immediately fire the employee. If you terminated the employee after the third offense, be prepared to explain the employee’s past behavior and all the warnings you provided about the problematic behavior. And with all due respect to those working at the unemployment agencies around the country, be prepared for aggressive, even rude, questioning. If you’re nervous, consider practicing in advance with by having a colleague ask you mock questions.

You can always call your favorite employment lawyer if you anticipate later litigation, if you’re not sure whether a particular claim is worth fighting, or if you just want someone else to handle the claim. If you follow these tips, you will be well on your way to effectively handling unemployment claims.

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