Legal Ease


Contesting Unemployment Benefits Claims


By Richard D. Alaniz, Alaniz Law & Associates T


he goal of almost every employer is to maximize profits by reducing operating costs whenever and


wherever possible. The costs generated by excessive unemployment claims is an issue of particular concern for most employers. Challenging every unemployment claim would therefore seem to be a good business decision. It can have a significant impact on the tax rate the employer must pay to help fund unemployment insurance. The fewer the successful claims the employer has, the lower the tax rate. However, contesting every claim may not necessarily be the best strategy. There may be good reasons for not contesting some claims.


When Contesting Benefits is Not Advised There are a variety of situations where an employer may not have adequate grounds to contest an application for benefits and the effort made would very likely be in vain. Employees who are laid off for business reasons, such as a reduction in force (RIF) or downsizing provide no legitimate basis for challenging an application for benefits. A company may also voluntarily give up its right to contest unemployment benefits as part of a severance agreement entered into with the departing employee. It would be part of the “consideration” given in exchange for the employee giving up the right to contest the termination under any of the various state and federal laws that provide protection against discrimination or improper termination.


Some human resource professionals as well as some employment attorneys advise that employers carefully consider challenging the benefit applications of terminated employees.


20 ❘ July 2019 ®


They argue that fired employees are very likely to be angry ex-employees. No matter the actual reason for their termination, the company will be viewed by them as acting unfairly. That angry former employee will have his/ her anger stoked by the attempt to deny them unemployment benefits. They may seek out a lawyer for help. With the ever-growing number of lawyers and the litigious mentality that is so pervasive today, that former employee could easily find a lawyer willing to challenge the termination. Claims of an unlawful discriminatory motive such as race, gender, age, disability or some other legally protected status are easy to file. Defending a lawsuit, even when successful, can be an expensive and time-consuming proposition.


Disqualification from Unemployment Benefits Contrary to what some employers believe, even fired employees can successfully claim unemployment benefits in many circumstances. Where the termination was the result of the employee simply being unable to satisfactorily perform the job duties or had poor work habits, the likelihood is that benefits would be awarded. Also, termination for minor rule infractions such as attendance requirements would similarly not be grounds for the denial of benefits in most cases. Poor attendance is one of the most common issues that causes employee termination. In most states, it is only when an employee is fired for misconduct that he/she is disqualified to receive unemployment benefits.


Unfortunately, what


constitutes “misconduct” sufficient for disqualification has been substantially limited in most states. It requires willful conduct that harms the company. Such things as theft, fighting, engaging


in workplace violence, and sexual harassment would almost always be grounds for denial of benefits. Obviously, employees who voluntarily quit their employment are generally ineligible for benefits. If there is an issue with regard to a voluntary quit, it usually revolves around whether the employee had just cause to quit. Deciding to leave a workplace with abusive supervisors would probably not be considered a “voluntary quit”. It is much more likely to be seen as a constructive discharge.


Contesting a Claim As noted above, there may be circumstances where the company will decide not to contest a claim even though it may have adequate grounds to do so. Ultimately, an employer should contest a claim for benefits only if they have sufficient grounds that will likely result in disqualification. Termination for poor work performance, inability to learn new procedures or operate new equipment, and similar common reasons for employee termination provide no basis for contesting the award of benefits. Only those cases where serious misconduct has occurred are good candidates for a successful challenge. As in any other legal matters, they require substantial time and attention to detail. The rationale for the denial of benefits must be clear and convincing. In addition to a clear narrative that describes in detail the basis for termination, all applicable rules violated, documented oral warnings and all written warnings should be attached to the contest.


Appealing An Award of Benefits It is quite possible that benefits will be awarded even in circumstances where the “misconduct” appears evident.


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