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Contesting unemployment claims: A quick guide for employers


Contesting an unemployment claim may seem like a pretty straightforward process, but it’s not always as cut and dried as you might think.

While the rules vary from state to state, there’s one consistent underlying theme: To qualify for unemployment insurance, employees must have lost their jobs through no fault of their own.

This leaves a lot of room for interpretation.

Just consider these two cases:

  • An employee who was terminated for being habitually late, but claims ignorance of the company’s attendance policy
  • An employee who was fired for theft, but wasn’t officially warned that stealing is grounds for immediate termination

Surprisingly, both employees could be eligible for unemployment benefits. We’ll get to why later.

The fact is, it’s not easy to contest unwarranted unemployment claims, even when the fault may clearly lie with the employees.

Still, it’s worth the effort, if you believe an employee’s ineligible. Unemployment claims chip away at your bottom line — racking up charges to your unemployment insurance account and increasing your tax rate. (An employer’s tax rate is based on the amount of benefits paid to former workers.) And false claims — claims based on false or misreported information from employees — are considered fraud.

So how can you fight back? The key to contesting a claim is having good management practices overall. Implement these strategies now to put the brakes on unemployment claims later.

1. Learn who’s eligible

When employees become unemployed, state agencies can provide them unemployment benefits under certain circumstances.

Eligibility varies. But generally, individuals must have worked for the employer for a designated time frame within an established period of time to qualify for benefits.

Also, they must be truly unemployed, actively looking for work, and ready and willing to immediately accept work. And as we covered earlier, they must have lost their job through no fault of their own.

2. Create a failure-free environment

That last eligibility requirement is essential. As an employer, you want to make sure you’ve done everything you can to help your employees succeed at their jobs, so they can’t shift responsibility for their failure to you. Make it too hard to fail.

That starts by hiring the right person for the job in the first place. Also, build in supports and systems to help employees clearly understand your company’s expectations, like regular staff meetings and one-on-one counseling sessions with employees when needed. Everyone needs to be on the same page.

3. Set up solid policies

Fighting, sleeping and stealing on the job — these are obvious workplace no-nos, right? Not for everyone.

Spell out your expectations in company policies. Include these in a company handbook that you update regularly and distribute to employees. The policies you include should reflect what’s important to your company, but could cover:

  • Drug-free policy
  • Employee business expenses
  • Internet use
  • Confidentiality
  • Attendance and time-keeping
  • Acceptable conduct

4. Give direct and detailed warnings

Don’t beat around the bush when giving verbal warnings to employees. Give them detailed and direct feedback about their behavior and the consequences for it — whether that means counseling, suspension or dismissal.

Here’s an example:

“We feel that your conduct was inappropriate. You were swearing and yelling (substitute the behavior you want to address) and it caused a scene. It was disruptive, and violates our company policies. I need to warn you that any such behavior like that again will be grounds for immediate termination.”

The message is blunt and to the point, so your employees will know exactly where they stand.

5. Document, document, document

Remember the two cases shared at the beginning of the post? Both employees claimed that they were unaware of the policies driving their termination.

Unfortunately, without documentation, employers can’t prove otherwise. Don’t let that happen to your company. Start a paper trail.

With every policy statement and handbook you distribute, require signatures from your employees acknowledging they’ve read the information.

Do the same with warnings. Have the employee sign a written version of what you’ve discussed. You don’t need to get fancy with your documentation. Handwritten notes work fine. Just be sure the employee signs or initials it, with the date and time.

And while email shouldn’t replace conversation, it’s also a great way to record communications regarding performance errors, such as repeatedly missing deadlines or meetings.

It’s also critical, and required by certain states, to give employees leaving the company a written notice, detailing the reason for the separation and the date. This applies to voluntary and involuntary terminations. Ideally, both employee and employer will sign. But if the employee is unavailable or refuses to sign, mail the separation letter to him, and keep a copy for your records.

That way, when they claim they didn’t know why they were fired, you have proof to the contrary.

Keep these records in your files, or share them with your HR department.

6. Respond right away

And finally, when you receive an unemployment claim, answer it immediately. With the passing of the Unemployment Insurance Integrity Act in 2011, employers are required to respond to unemployment claims in a “timely and adequate matter.”

That means promptly verifying facts stated in the claim, including the dates of employment, employee wages or salary, and the reason for the separation. Failure to do so may result in additional charges to your unemployment insurance account or possible penalties.

The good news is that if you take the time to establish strong policies and procedures — you will increase your chances of successfully contesting an unemployment claim. And you’ll reap the benefits for years to come.

Find more tips on contesting unemployment claims in our free magazine, The Insperity Guide to HR Compliance.