“No way, we won’t pay!” 10 essential steps for successfully fighting unemployment claims

You recently terminated a store employee for theft. You investigated the situation—even viewed surveillance cameras—and there was no mistaking it: the employee was clearly shown stealing money from the cash register. Now, two weeks later, you receive a notice from the state unemployment agency advising you that the employee has filed for unemployment.Think it’ll cost too much to try and fight the claim, or it’s not worth your time and effort? Think again: Each claim can triple your unemployment rate which could mean thousands in extra taxes each year! While it may not be wise to contest all claims, it is certainly worth fighting them when a former employee isn’t entitled, especially in a situation where the employee was terminated for misconduct.

Because your unemployment compensation tax is closely tied to your company’s claims history, you should promptly challenge any claim that you believe is not justified. Below are a few simple steps you can take to help keep your unemployment rates to a minimum:

1. Know your numbers. Know how many unemployment claims are open and the number of claims you have won or lost. This will determine your current unemployment rate and whether or not you can expect an increase in your taxes the following year.

2. Understand qualification requirements. Not all claims are worth contesting. The amount of time and energy put into fighting a claim isn’t worth it if, by law, an employee is entitled to the benefits. In general, the grounds for disqualification are narrow and are interpreted in a way more favorable to the employee whenever possible. However, workers can be legitimately denied benefits for a number of reasons, such as simply not earning enough in wages to qualify, being discharged for misconduct, or for voluntarily resigning “without good cause”.

3. Become familiar with the process. In order to combat claims, it is important to understand how the process works.The claims process begins with the separation of the employee and a claim filed on their behalf. Shortly thereafter, you will then receive a notice in the mail; you can either ignore it or contest it. The agency will then make a decision, in which you or the separated employee is free to contest. At that point, an unemployment hearing is scheduled and a decision is made by the hearing officer. If you choose to appeal the hearing decision, it goes to the Board of Review for a final determination. An understanding of the process will help you to make appropriate decisions each step of the way, ultimately increasing your likelihood for success.
4. Take immediate action. As soon as you receive a notice from the state unemployment agency, respond by disputing it. Failure to respond within a certain time period (typically 7-14 days) indicates your acceptance of the claim as valid and the employee will likely be eligible to collect – costing you more money.

5. Gather documentation. Good recordkeeping is essential in successfully contesting any claim. Documentation of disciplinary notices, resignation letters, and other related evidence demonstrating the reason for termination will be vital in supporting your case. If there are witnesses, be sure to also get written statements from them. Remember that documentation stems from a solid employee handbook. When employees clearly violate company policy it is important to discipline them accordingly and have them sign off on it. This may be all that’s needed to prevent the employee from collecting.

6. Provide evidence for the involuntarily terminated. When dealing with involuntarily terminated employees, be prepared to show proof of misconduct on the employee’s part. An employee who is fired for inadequate performance will usually collect benefits. However, an employee that intentionally or deliberately disregarded company standards of conduct may be denied benefits. Fighting, insubordination, stealing, committing illegal acts on company property, failing a drug test, etc., are often legitimate grounds for a misconduct-based disqualification, depending on the state.
7. Provide evidence for the voluntarily terminated. Employees who resign voluntarily and without good cause are usually disqualified from receiving unemployment compensation. However, the question of “good cause” comes up frequently. “Good cause” is generally understood to mean a real, substantial, and compelling reason that would lead a reasonable person to quit under like circumstances. In most states, the employee must establish that he or she had good cause to leave the job and that the reason for leaving can be attributed, at least in part, to the employer’s actions or lack of action (e.g., failure to correct sexual harassment in the workplace). An employers’ best defense to an employee’s claim that he or she had good cause to quit is a signed resignation letter or statement from the employee setting forth the specific reason for the separation.
8. Attend all hearings. Once a claim is contested, in-person hearings are scheduled shortly thereafter. Always come prepared with as much information as possible and know how the law applies to your case. The law should support your view that the worker was separated under disqualifying conditions, such as misconduct or voluntary resignation without good cause. Legal representation at the hearing may be appropriate, particularly in contentious situations where other employment-related litigation may be anticipated.

9. Put your best foot forward. Prior to an in-person hearing, be sure to thoroughly prepare. Be ready to answer questions pertaining to the circumstances surrounding the employee’s termination, his or her performance, and the like. Have documentation ready to support the statements you provide during the hearing, including resignation and termination letters, the employee’s personnel file, and witness signatures. In addition to witness signatures, it is important to have at least one witness present that can support your claim. Other tips for putting your best foot forward during an unemployment claim include: being on time, only answering questions that are explicitly asked of you, remaining calm, and never speaking out of turn.

10. Contest the hearing decision. Although not particularly cost-effective, employers that are dissatisfied with the outcome of the hearing can generally protest the hearing officer’s decision to one or more appeals within the state unemployment agency itself and then through the state court system.

Given the current state of the economy, unemployment claims are increasing and employers are getting stuck footing the bill. While it may not be wise to contest all claims, it is certainly worth fighting them when a former employee isn’t entitled. Combating all undeserved claims will help to keep your unemployment rate low and prevent you from paying through the nose in taxes.

Your best defense against unemployment claims starts before you terminate an employee. For insight into effective and legal termination practices be sure to check out our complimentary Webinar: Employee Terminations & Layoffs: 8 Steps for Avoiding Termination Lawsuits.