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Payroll & Taxes

8 Ways Your Business Can Be Proactive in Managing Unemployment Claims

Christine Batten, PHR
by Christine Batten, PHR on May 12, 2014

unemployment claimsYour unemployment tax rate largely depends on the number of past unemployment claims against your business. Many business owners aren’t sure how to manage this cost. 

While you can’t control whether an employee decides to file a claim, you can take steps to reduce the risk of unqualified claims being levied against you. You may be surprised to see that many of these steps should be taken before an employee is terminated or resigns. Here are some ways to proactively protect your unemployment insurance rate.

Start the Employment Relationship Right

You want to make sure all employees know what is expected of them from the start. Be sure you have detailed job descriptions, a thorough employee handbook and clearly outlined policies. Have employees sign off on their job description, your policies and handbook as documented proof that they have seen and acknowledged them.

Keep Accurate and Complete Records of Everything

If you contest an unemployment claim, you are going to need specific facts and documentation to support your case. This includes things like written proof of the employee’s acknowledgement of policies, reports of unsatisfactory work or misconduct, and documentation of all warnings or discipline that occurred, whether verbal or written. Be sure to have the employee, you or a manager and a witness sign off on all written documentation. Keep all of this information in a safe place so it’s not missing when you need it.

Only Fire/Lay Off Workers When Absolutely Necessary

The whole point of the unemployment benefits program is to help workers who are out of a job. Mostly, an employee who loses their job due to layoffs, workforce reduction or other employer-related reasons will be eligible for benefits.

Answer All Correspondence and Be Sure to Contest Claims Right Away When You Think the Worker is not Eligible for Benefits

The state will contact you when a former employee files for unemployment benefits. Be sure to promptly answer all requests for information and follow up. If you don’t cooperate with the state, you dramatically increase the chance that you will not win if you contest a claim. Also, in most cases it’s in your business’s best interest to contest an unemployment claim right away when you believe the employee is not qualified.

Know the Difference between Misconduct and “Underperformance” in Your State

Someone who was fired from a job for not doing their job well can be eligible for unemployment benefits, if it can be proven that he/she was not engaging in what’s called “misconduct.” Every state has a different definition of “misconduct” – but generally speaking, it indicates that someone was deliberately acting to do harm against the business or someone at the business. Even someone who lost their job due to chronic lateness or missing deadlines can argue that they had good intentions. It’s important to know that what qualifies as misconduct can be a matter of interpretation. It can help to make sure you give a reason other than “poor performance” as cause for termination.

The Employee’s Last Day Should Be One With a Specific Event

Officials want to know a specific incident that caused you to terminate. It shouldn’t be some minor straw that broke the camel’s back. If you have to terminate someone’s employment, you might consider doing so on the day he deliberately violates a policy or willfully ignores job duties. That way you can say a specific incident of misconduct resulted in the termination.

Don’t Make Any Major Changes to Someone’s Job Unless You Have To

If a worker resigns because you changed working hours, salary or location, they could be entitled to benefits. They could claim that the change in circumstances was caused by the employer and was out of their control. If you need to, advise the employee in writing and have them sign an agreement to the change, with an area where they can document any concerns about the change they may have.

Know Your State Laws

When it comes to unemployment law, every state is different. Learn the rules and definitions of your state. You can contact a representative or the state or do some research online. Unemployment statutes can vary widely from state to state, and it’s never a good idea to assume you know what the rules are. You may be surprised at what you learn.

Unemployment law can be varied and complicated. Learn more about the basics of unemployment claims in our last blog post. There is a lot for employers to consider – but helping employers avoid and deal with unemployment claims are ways that FrankCrum makes it easier for you to be more successful business. We can help you put many of these strategies in place so you’re prepared in the event of a claim. And if a former employee does file an unemployment claim - we’ll help you through the process. Contact us to learn more about how we can help you manage the many obligations of being an employer.

Christine Batten, PHR
Christine Batten, PHR

Christine has over 20 years of HR related experience with a background in labor and employment law.