WORKPLACE: Managing Unemployment Costs

Unemployment benefit payments are supposed to be available to workers (claimants) who are temporarily unemployed through no fault of their own and who are attempting to reenter the labor force. Unfortunately, the unemployment system has not been updated or revised in many years, so it is fraught with the potential for abuse that always seems to fall on the back of the employer.

Employees who quit their jobs without good reason connected with work or employees who are fired for misconduct connected with work should be disqualified from receiving unemployment benefits. Employers usually have to prove this misconduct. This is why it is so important to document employee issues and have employees develop and sign a written resignation letter.

Company unemployment taxes pay for unemployment benefits. For this reason, employers should become familiar with the events that disqualify former employees from taking advantage of unemployment.

Before an individual can receive unemployment benefit payments, several basic requirements must be met. The claimant:

• Must show a prior attachment to the labor force.

• Must not have caused his or her unemployment. Benefits are paid only to individuals unemployed through no fault of their own. Of course, most states take the position that "poor job performance" is not the fault of the employee!

• Must maintain an active search for employment while he or she is collecting benefits.

TIPS TO KEEP COSTS DOWN. Although it seems that almost any person can collect unemployment for any reason, there are some proactive things you can do to help manage unemployment costs:

• Keep accurate records of employment agreements, employee performance, dates and details of warnings and other disciplinary measures.

• If you have received information that a claimant is not available for work, is not able to work, has refused to work or is employed elsewhere, be sure to notify the Unemployment Office immediately.

• Have new employees complete an "introductory period acknowledgment" form. Many states disqualify employees from receiving unemployment compensation if they are terminated within the first 90 days of their employment for unsatisfactory job performance. The acknowledgment form is your proof that the employee was under a trial period. (Note: The proper terminology is "trial period" or "introductory period," not "probationary period." The term "probationary period" can create a conflict with the Employment At Will doctrine.)

• Dismiss employees with unsatisfactory performance within the introductory period. This can help save on unemployment costs and, in most cases, the employee will not improve anyway. After all, the highest motivation to do well is usually when an individual begins a new job.

THE FIRST 90 DAYS. While unemployment regulations encourage you to terminate an employee with poor job performance within the first 90 days of his or her employment, you must still be able to prove that the termination was legal, fair, compliant and job-related. If your decision gives the appearance of discrimination or if an employee believes that he or she is a victim of discrimination, a charge can be lodged against you. This is true even if the employee only worked for you one day (or one hour, for that matter!). The first 90 days is not a "free time" during which you can terminate an employee and not have to worry about meeting the burden of proof.

Also, it is perfectly acceptable to establish a trial, or introductory, period that is longer than 90 days. Some organizations have six-month introductory periods. Regardless of how long your trial period is, in most states you have 90 days during which to evaluate and terminate an employee for poor job performance before your account will be charged with any benefits the person receives.

One final thought about trial periods: if an employee transfers to a new position or is promoted into a new position, it is perfectly acceptable to place him or her under a new trial period. In most states, the unemployment benefit, however, only pertains to new hires during the first 90 days of their employment.

INVOLUNTARY SEPARATIONS AND MISCONDUCT. Involuntary separations can include termination for poor job performance (for example, excessive absenteeism or tardiness), termination for misconduct, layoff due to lack of work or position elimination.

When an employee is terminated (a.k.a., involuntarily separated) he or she will be disqualified whenever you can prove that the employee engaged in an act of "misconduct." Misconduct may be established where there was any of the following:

• Disregard of the company’s interests.

• Willful violation of company rules. (Note: An up-to-date, properly written employee handbook with a signed acknowledgement receipt can help prove that a policy was willfully violated.)

• Disregard of the standards of behavior that the company has a right to expect of its employees.

• Disregard of the employee’s duties and obligations to the company.

If allegations of wrongdoing are more general than these, you may not be able to prove that the employee committed an act of misconduct and your unemployment case could be lost. As a matter of practice, you should fight any claims that are unjustified. This could mean attending a phone or personal unemployment hearing during which you will need to present direct evidence of the misconduct (hint: hearsay is inadmissible) to meet the burden of proof. Your well-written, detailed documentation along with credible witnesses can help you win the case.

Here is one last thought regarding this issue: if the employee is unable to perform assigned work, you may terminate the employee for inability to perform, but their inability is not considered "misconduct" in the eyes of unemployment officials. This is because, many times, employees can establish their inability was something that they could not change.

You have to love the system.

The author is president of the Winter Park, Fla., consulting firm, Seawright & Associates, Inc. She can be reached at 407/645-2433 or jseawright@pctonline.com.