Protect Your Unemployment Contribution

Kathryn Carlson, director of human resources products for KPA—a provider of human resources management consulting and software services, says there are two reasons why shop operators might want to dispute unemployment insurance claims.

First, you might have an ethical issue with people wrongfully collecting the benefits, and feel morally obligated to fight it. This is a significant issue today, as many people continue to be chronically unemployed and funds are running low in some states.

In California, for example, more than a million people collect unemployment insurance benefits, according to Bruce Murray, regional director of the California Employers Association (CEA). The state, which is paying out roughly $333 million a week, is running about $9 billion short.

The second reason you might dispute a claim, Carlson says, is to protect finances. Your shop pays into the state’s unemployment insurance fund through taxes. Any claims filed by your past employees can count against your premium.

Carlson says if your shop routinely has turnover and constantly puts people into the unemployment fund—known as a high modifier rate—the state could raise your premium and require you to make higher than average contributions. And that can ultimately affect your bottom line.

Disputing unemployment insurance claims isn’t a lengthy process, either. Carlson says it takes no more than two hours total—40 minutes for paperwork and less than an hour for a hearing, if an actual hearing is necessary.

You’ve got to understand why the legal system might side with you before attempting to dispute unemployment insurance claims. To put it simply, you can dispute a claim if the employee quit, or was terminated because of some type of misconduct. But what constitutes misconduct is where things can get fuzzy.

Christian Wynbelt, attorney with law firm Rodenhouse Kuipers in Grand Rapids, Mich., says even legal resources don’t have a clear-cut definition of what misconduct means. But there are a few rules of thumb you can follow.

Problems such as theft, insubordination, fighting or sleeping on the job will be considered misconduct. Beyond that, employees have to exhibit a pattern of repeated violations of company policies.

If you terminated an employee for what you feel is misconduct, you can’t just make the claim and win the dispute—you’ve got to be able to prove it. That requires you to document behaviors and create written materials to serve as a benchmark of performance expectations.

Carlson says this is a fairly painless process if you have a proactive strategy of documentation. To help, she suggests diligently adhering to the following six tips:

1. Develop A Strong Employee Handbook

Employees need to know what their duties are and what the company expects from them, Carlson says. Shop operators should provide a handbook for every employee and have it signed in writing.
You can refer to the rules and policies in your handbook when fighting unemployment insurance claims, Carlson says. You can easily explain how the employee was terminated as a result of ignoring those policies.

2. Develop Standard Operating  Procedures and Work Guidelines

Create documents that spell out work behaviors and processes you expect, Carlson says. For example, you might require every employee to wear a respirator in the paint booth, or to store chemicals in a certain way. Repeated violations of those processes can qualify as misconduct—as long as the employee knew about the required procedure.

Wynbelt says SOPs are critical to prove an employee’s pattern of ignoring the rules. Poor work behaviors can be seen as negligence, not misconduct, without clearly written policies.

3. Document disciplinary actions

It’s important to document all disciplinary action or counseling sessions held with employees. Document the date, time, topics of conversation and level of reprimand given, Wynbelt says. That shows proof that you attempted to correct the employee’s behavior before termination.

4. Document Employee performance evaluations

Include all performance evaluations conducted with the employee when disputing unemployment insurance claims, Carlson says. If an employee routinely scored low in certain categories, it shows you addressed the issue and tried to correct it.

5. Make employees aware of consequences

Employees need to be aware of the potential ramifications of their misconduct, Wynbelt says. Make that known during any disciplinary sessions. In addition, add a line to each of your company policies that states, “Failure to adhere to these policies could result in disciplinary action including termination.”

That gives you documentation that an employee was warned and knew about the consequence if the problem persisted, Carlson says. Then you can prove the employee was terminated due to misconduct in accordance with company policy.

6. Make a detailed report

Be thorough in your initial response to the state when notified about an unemployment insurance claim, Carlson says. Take time to detail the specific information and circumstances surrounding the employee’s termination. Also highlight the process you went through to make the final decision.

Carlson says these materials and documentation practices are crucial during unemployment insurance disputes and other types of legal proceedings, such as wrongful termination lawsuits. But that’s not all—it will improve your business, and you’ll also end up with more efficient employees.