Should You Contest an Unemployment Claim?

By: Jennifer Leahy
September 12th, 2011

It was one of the best days of your life when you finally terminated Pete the Problem Employee. Gone were his bad attitude, innumerable infractions and slipshod work.

But, like a bad penny, Pete resurfaces weeks or months later in the form of an unemployment claim.

Is it worth fighting his allegations that he is now unemployed through no fault of his own?

Yes – as long as the paperwork pertaining to the termination process is thorough and accurate.

“We hate to pay taxes. And we really hate it when they increase,” says Randall Barker, a Certified Employment Law Specialist (CELS) and certified Senior Professional in Human Resources (SPHR).

A Society for Human Resource Management (SHRM) publication notes that unemployment insurance (UI) is a federal-state partnership. States finance regular unemployment benefits through taxes levied on employers. These taxes are experience-rated, which means that employers with a higher percentage of former employees receiving unemployment benefits pay a higher tax rate. The taxes, with a few limited exceptions, are paid quarterly. Because the experience rating of unemployment claims directly affects an employer’s taxes, it is in the employer’s best interest to appeal any unwarranted claims.

After receiving an unemployment claim it’s best to first ascertain that all of the facts presented by the employee are accurate.

• Did they work for the company during the time period specified?

• Is the payment information correct regarding wages, severance, or vacation play?

• Were they terminated or did they resign?

An employee whose hours were cut or position eliminated through no fault of their own is eligible for benefits and contesting the claim is a waste of time for an employer.

However, if the employee was terminated for just cause, fighting the claim can prevent an increase in your unemployment tax rate.

Examine the employee’s file. What exact reason was given for the termination? Is there ample evidence of the employee’s willful misconduct as well as the warnings by supervisors about the aforementioned behavior?

“If a company follows their stated policies and documents the failure of the employee to follow them, then the person has earned the right to be fired,” says Barker.

It’s important that the employee was terminated for a behavior that they were formally warned was unacceptable. For example, a company would not be justified for firing Problem Employee Pete for insubordination if the only infractions found in his file were related to chronic tardiness. There should be ample evidence that an employee has been warned multiple times that their behavior is unacceptable and was warned that termination would occur if not rectified.

Though processes and procedures vary by state, there will be a method to contest any employee unemployment insurance claim. Employers who carefully create an exit paper trail are protected against costly unemployment claims and should always exercise their rights to defend themselves against invalid claims.

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