2012 March: In The Know

You receive a notice in the mail that an ex-employee is filing for unemployment. But he quit the company and one doesn’t receive unemployment for that. He wasn’t fired; he wasn’t demoted and sulked off in dejection; he wasn’t harassed into submitting his resignation. Even though you believe that, in these tough times, ex-workers need all the help available, you decide to appeal the claim on the principle that the former staffer doesn’t deserve the benefit.

The question is, how do you do it so that you win the challenge? Unemployment is state mandated, so each state does things a little bit differently. Nevertheless, the basics are the same. The employer can challenge the claim. There’s a hearing, then a binding determination is made. The employer generally needs to prove his case to win.

One issue is that most employees feel that unemployment compensation is their given right. They feel that they pay into the system –– that money is taken out of their paychecks, which becomes part of the
unemployment pool. That belief is incorrect. Employees don’t pay into unemployment. Only employers do. So they don’t deserve the aid just because they are out of work.

Here’s why it matters. Each state sets an experience rate ranging from 1.5 percent to 12 percent of payroll (up to the first $14,000 of wages for each staffer) that employers pay into the pool. That rate is based on a formula of how much unemployment claims the company has had as a percent of the total staff contribution. If low, the rate will be 1.5 percent. If high, the rate will be 12 percent. So if you have a $50,000 payroll contribution, paying 1.5 percent would mean $500 outflow while paying 12 percent would mean a $6,000 outflow. If you maintain a low employee turnover rate, you pay $5,500 less into the system each year. Thus, having a low unemployment experience rate is to your benefit.

The first step in fighting an unemployment claim is to request a hearing.You will be assigned a date and place at some unemployment
office. There will be an arbitrator, who is an attorney, who will listen to your case. Both sides give their version of the story. Each side can ask questions.

The arbitrator asks some questions. Then he dismisses the parties and the hearing is over. The whole session takes maybe
20 minutes.

Three or four days later, you’ll receive a notice in the mail announcing the ruling. The decision is binding, and the ex-employee will begin to collect unemployment compensation if he/she wins or may not collect if he/she loses. A few states, including Massachusetts, are attempting to handle these claims via the Internet.

What do you have to do to win the case? If the employee actually did quit, you need to prove that he quit beyond a shadow of doubt. Having something in writing or on tape –– such as a voicemail –– is often a clincher. For instance, bring along the employee’s letter of resignation or a video or audio of the phone conversation in which she would not work unless the company did such and such. However, in the absence of anything written, you have to be persuasive. You could bring a witness. One owner won the case because he brought an employee who said the ex-employee was getting more and more disgruntled, and was threatening to quit.

Preparation is key. Come up with a presentation that indicates the ex-employee left on his/her own volition. Just saying the person quit, when the other side denies it, doesn’t typically work. Secondly, conduct yourself professionally. Don’t act aggressively. Stay calm and state the evidence as clearly as you can. Don’t get into a shouting match with the ex-employee. Don’t be bullying. The arbitrator will not look well upon your case if you try to overwhelm him with power. Remember, everyone in the room is a human being.

Lastly, there is another possibility. If the employee willfully disobeys company policy and continues to do so, then he can be terminated and it can be construed as quitting. For instance, if an employee is not supposed to accept tips, but does so and insists he has a right to accept tips despite the fact that it is against company policy, then he is in effect, asking to leave the company. The employer has a perfect right to fire the individual. But, in the hearing, if the ex-employee questions the provision, you need to have this policy in writing. A company manual will be sufficient. Having an employee signature stating that he or she did receive and read the manual is efficient and effective.

Make your unemployment challenges count by marshaling the facts and preparing your case in advance.

Gray Areas

The following are situations in which a former employee might file for unemployment, and how you argue why the benefit is not deserved:

An employee quits because he feels he’s being unfairly treated, and applies for unemployment. Your argument: ask the ex-employee to document the unfairness.

An employee takes a month off for injury and will not come back and applies for unemployment. Your argument: the employee still has a job.

An employee doesn’t go along with the program and refuses to do several tasks. Your solution: don’t fire him, lower his pay. Thus, he still has a job.

An employee quits because he feels discriminated against and files to collect. Your argument: There is never any company discrimination. It is just that the employee is not doing the job he was hired to do. Secondly, if there was discrimination, it must be proven in black and white.

Howard Scott is a former business owner and longtime business writer. He has published 1,600 magazine articles and five books.