Disputing Unemployment Compensation Claims

There’s no point in wasting your time and running up legal bills by contesting the payment of unemployment compensation benefits to workers who deserve them. If you have to lay someone off because business isn't booming as you had hoped, or if you fired someone because you want to hire your brother-in-law instead, don't object when your ex-employee makes a claim. On the other hand, if you have to fire someone for stealing, or someone quits to start their own business, you can and should contest a claim for unemployment benefits.

What do you do if you're not sure whether the worker deserves benefits or not? Contest the claim as discussed below, up to the point where you'd need to hire a lawyer. At that point, if the worker has won, you may want to reevaluate whether the issue is worth pursuing. Your lawyer should be able to estimate your chances of winning.

Respond to the claim in a timely fashion. When a former employee files for benefits, you'll get an official report form in the mail from the state unemployment agency. Fill it out and return it within the deadline stated on the form. These deadlines are rarely extended, even if you have a good excuse. Fail to respond, or respond too late, and the worker will automatically get benefits in most states.

Just give the facts. Typically, the report will ask how long the employee worked for you, what his or her earnings were, whether the worker quit voluntarily or was dismissed, and what the facts surrounding the termination were. A few sentences should do it.

For example, if you need to fire somebody because of excessive unexcused absences, don't just write, "discharged for absenteeism" on the unemployment claim report. Instead, note when the absences occurred, how many there were, and when prior warnings were given. You also need to explain about the final incident that led to the employee’s dismissal.

Go to the hearing. You should have a presence at any hearings, formal or informal, before the state unemployment insurance officials. This is the only effective way to present your side and to respond to any false or incomplete statements your ex-employee might make. It’s up to you to prove your statements, by testifying or presenting documents. The person who actually witnessed the misconduct or other action that led to the termination should be present to testify.

It’s a good idea to have an attorney represent you at any hearing, especially the first time you are involved in an unemployment case. Attorney representation becomes a virtual necessity if you lose at the hearing level and decide to appeal to the court.

If you learn new facts, report them to the state. If you later learn of facts that would disqualify the claimant for benefits (for example, turning down a job offer, going on vacation without looking for work, or refusing to take the old job back if you offered to rehire the worker), report these facts to the state unemployment agency.

If you lose, appeal. If an employee is found eligible for benefits despite your objections, follow up with an appeal to the administrative agency, and (if you lose again) to the courts, unless your lawyer tells you this would be fruitless in your particular case.

Don't let a possible claim stop you. Even though a successful unemployment claim may raise your tax rates, don't let the fear of a rate increase keep you from firing an employee who is dragging your business down.