Perhaps the most common frustration I hear from new or prospective clients is how often they “lose” and have to pay unemployment claims. Certainly, employers who conduct site closures or layoffs due to economic conditions don’t oppose the claims from those impacted, but it is the claims from other separated employees that has them asking for my help.
Employers can’t avoid paying for unemployment insurance tax – UI is part of the payroll taxes owed each quarter. The rate varies by employer and your rate is impacted by your experience. Like any insurance, paying claims will ultimately drive up your rate and increase the amount you owe. Avoiding costs associated with rate increases may drive some employers to contest unemployment claims, but for most employers, it’s the principle of seeing benefits awarded to a terminated employee that causes frustration.
In Oklahoma, unemployment is administered by the Oklahoma Employment Security Commission, and applicants can generally be awarded benefits as long as they meet the eligibility criteria and can demonstrate they are no longer employed through no fault of their own. The key to unemployment decisions then, generally lies in establishing employee misconduct or “fault”. Note that unemployment eligibility and decision criteria vary from state to state.
Misconduct
Employee misconduct that might result in termination is often described in employee handbooks. Common sense would dictate that the things which result in termination would also result in denial of unemployment benefits. Unfortunately for employers, it’s not that clear and simple. Not all actions that result in termination are serious enough to justify denying unemployment benefits to a terminated employee. Generally speaking, an employee engages in misconduct that would disqualify him/her by “willfully doing something that substantially injures the company’s interests”. Theft, intoxication at work, or sexual harassment no doubt meet that definition. Chronic tardiness and/or absenteeism also generally meets the criteria of misconduct. The key to “winning” these claims lies in the employer’s ability to provide documentation of policies and knowledge of the consequences for violating them – and to defend against any alleged inconsistency in enforcing those policies.
There are a number of other common actions that often result in termination – but do not always constitute misconduct for unemployment purposes. These include poor performance or lack of skills, errors in judgment, inefficient work habits, unpleasantness or poor relations with coworkers, or off-work conduct that does not have a direct impact on the employer’s interests. How can an employer avoid paying unemployment in these kinds of circumstances? The key to winning these may also lie in documentation and policy enforcement, but there are several practices an employer can utilize to improve their odds:
- Evaluate skills that are required for a job and don’t hire people into jobs if they don’t have the skills required. This is far easier said than done when employers are desperate to fill vacancies and will often take anyone with a pulse just to keep production running. If you must compromise by hiring lesser-qualified employees, make sure hiring managers know that deciding to hire and expecting to “train up” means you can often expect to pay their eventual unemployment claims if training isn’t successful.
- Establish expectations of conduct in your policies and be sure these are entrenched in the company culture. When employees are unpleasant, deal with it immediately. This doesn’t mean you should write up everyone who has a bad day or a moment of irritability, but neither should you tolerate an employee whose behavior consistently lies outside of those expectations. Habitual yelling, offensive or inappropriate language, name-calling or rudeness to co-workers should not be tolerated and could even be construed as harassment if allowed to continue. Use conduct and anti-harassment policies as a basis for addressing these behaviors, and document the specific behaviors exhibited as well as the consequences for continuing the behavior. Look for consequences of unpleasant behaviors that you can document have a direct impact to the company’s interests and be sure employees understand those. Have customers complained? Have you lost sales or missed deadlines as a result of the behaviors? Have other employees quit, filed complaints, or threatened to quit as a direct result of the behaviors? A word of caution – you cannot expect to take action against some employees for unpleasantness if you tolerate it from others!
- Beware of taking action for off-work conduct unless you can demonstrate a direct link to the company’s interests. Paying an unemployment claim might be the least of your worries as an employer if employees experience adverse action because of things they do in their off-work time. Consult legal counsel or a competent HR professional before taking any action of this nature.
Why does someone get unemployment when they quit?
When it happens, this infuriates managers even more than paying unemployment to someone terminated for cause! In most states, employees who quit can obtain benefits if they are able to show good cause for why they quit. Good cause essentially means that conditions were so bad, the employee had no choice but to quit. Employees subject to harassment or unsafe working conditions might be justifiable examples, but employers can prevail in many of these cases if they have sufficient documentation.
When employees quit, ask for a resignation letter. This is effective when they report some other reason for termination when they apply for unemployment. I’ve often utilized a short resignation template when an employee doesn’t have a resignation letter prepared. If they text their resignation (yes, people really do that!), screenshot the text and put it in their file. If they leave a voicemail, save it on your server somewhere and transcribe to a note in their file referencing where the voicemail can be accessed if needed in the future. Information obtained in exit interviews (i.e. “Why are you leaving?”) may also be useful if documented as part of a standard exit practice. Actively communicate your open door and non-retaliation policies to all employees. Be sure employees know how to register complaints of harassment or unsafe/unpleasant working conditions. Investigate and respond to those complaints when they come in.
The best advice is to educate the people making discipline and termination decisions for your Company. Fighting unemployment (or worse – defending against employment litigation) is not just a job for HR. Everyone with supervisory responsibilities should know how unemployment benefits work on the employer side of the equation. Inform them when a claim doesn’t go your way – and what they could do to ensure it doesn’t happen like that again. Train those people on proper documentation, and be sure you have access to an HR professional or legal counsel for ambiguous or uncertain situations.