The Unemployment Road Map, Part 1: How to Navigate Through an Unemployment Claim

Even the best employment relationships eventually come to an end and sometimes, when they do, they result in the former employee filing for unemployment benefits. You, as an employer, may expect this or it may come as a surprise. If you’ve received an unemployment claim and are not experienced with the process, you will likely have some questions.

So, how do you get the answers to these questions? Where do you start? This blog series, The Unemployment Road Map, is a resource that TriNet offers to provide you with guidance on this journey. The Road Map is broken up into five separate posts. So, no matter where in the process you find yourself, you can look to us to get the information you need.

Start with the hiring process

Believe it or not, the unemployment journey begins during the hiring process. The most important part of the unemployment claims process is the work you do to ensure new employees are aware of your expectations of them, and to ensure they can perform the work for which they were hired.

A clear job description, employment policies, and the employee handbook should be presented to and acknowledged by each employee, in writing, before or at the time of hire. If you are asked by unemployment officials to prove that the claimant (your former employee) was aware of your company’s policies, you will want to have their signature acknowledging that the policy in question was presented to them, that they agreed to be bound by the policy, and that they were made aware of the expectations of their job.

When someone is terminated for job performance issues, most states will ask the employee a series of questions, including: “Did you perform the work to the best of your ability?” If the employee answers that question with a “yes,” they may receive benefits. This is one of the reasons it is important to have a clear job description for each employee. This is also why, performance management, including formal performance improvement plans during their employment with you are necessary to address, in writing, any skill gaps, deficiencies and opportunities for improvement.

Know the difference between voluntary and involuntary termination

A voluntary termination, which is a situation in which the employee quits, is usually a more straight-forward process than an involuntary one, which is when the employer terminates the employee, either due to performance issues or for budgetary reasons. However, a voluntary termination does not guarantee a favorable determination for the employer.

With voluntary terminations, it is important to make sure you receive a written resignation from the exiting employee and perform an exit interview before they leave. Then the burden falls to the claimant to prove they had good reason for leaving that is attributable to the employer. For example, an employee has reported workplace harassment by a co-worker. They have documentation to prove they approached management with the problem and suggested a transfer or other means to solve the issue. This claimant would probably receive benefits if they quit.

Involuntary terminations are more complicated. For unemployment purposes, a layoff is involuntary and is always chargeable to your state unemployment tax act (SUTA) account. These claimants are considered to be unemployed through no fault of their own and, as long as they are ready, willing and available for work, they are eligible to collect benefits.

Other involuntary termination reasons are not so clear. Your HR services provider can help you to position your company to most effectively address any and all requirements and documentation needed by the state.

To get started with the process of responding to a claim for benefits involving an involuntary termination, be sure to document the exact reason for the termination. Was there a performance issue (which should be documented already through at least one written warning or performance improvement plan, unless the issue was sufficiently egregious to warrant immediate discharge)? Was there serious misconduct resulting in immediate termination? Instances of misconduct that can lead to immediate termination include theft, insubordination, violent action or blatant harassment witnessed by others.

Again, proper documentation of past noncompliant behavior can simplify this process. If there has been clear communication about the position and employment policies, a signed acknowledgment from the employee, and any documented warnings given to the employee, you have a great foundation to stand on to prove to the state that there was a valid reason to terminate. 

Ultimately, the applicable state unemployment agency makes the decision to grant or deny unemployment benefits. How your business responds to a claim can make a big difference.

Respond in a timely fashion

In order to protect your business, you must respond to all agency requests for information on or before the deadline stated on the document. Although unemployment laws and penalties vary from state to state, they all likely have the ability to penalize your business in one way or another for untimely or incomplete responses.

The reason for this urgency in response is the federal Unemployment Insurance Integrity Act. This legislation requires states to execute methods to ensure prompt and complete responses to claims to avoid benefits being wrongly paid out to ineligible claimants. Non-compliant states jeopardize federal subsidies for benefits. Non-compliant employers endanger their ability to receive state unemployment credit against their Federal Unemployment Tax Act (FUTA) taxes.

So, even if you have decided not to contest a claim, you must provide a complete and thorough response to the agency’s request. Many states penalize employers for intentionally failing to divulge material claim information. States may also require employers to disclose details that may result in the disqualification for benefits.

State calls and determinations

Now that you have submitted the claim response and all relevant documentation, it can take up to 30 days for the state to determine the claimant’s eligibility for benefits. During that time, you may receive a phone call from the state asking for more information or you may receive a request for a verification or rebuttal to statements the claimant has made. Timely responses to these requests are also required.

Know what to do if you need to appeal

Once the state has made a determination and decided that your SUTA account will be charged, you may file an appeal if you disagree with the decision. Once an appeal is filed, the state will set a date for a hearing. Both you and the claimant will have to attend the hearing, which is adjudicated by a state hearing officer or administrative law judge. You will both be required to provide testimony to the events surrounding the employee’s termination. Based on the testimony and documentation, the hearing officer will decide whether to uphold the original decision or to reverse it. Bear in mind that you are not the only party who can appeal an unfavorable decision; the claimant has this right as well.

When it comes to navigating unemployment claims, being well-informed and prepared will have a positive effect on your outcomes.

This communication is for informational purposes only; it is not legal, tax or accounting advice; and is not an offer to sell, buy or procure insurance.

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