By Attorney Scott Gibson

At some time, every employer faces questions surrounding unemployment compensation benefits.  Here is a quick primer on the things you need to know to properly handle unemployment claims.


A.           Who is Entitled to Unemployment Compensation

The short answer is that virtually everyone in your workforce is eligible to receive unemployment benefits.  Whether a particular employee is entitled to those benefits depends on the reason why he became unemployed and his post-employment efforts to find suitable work.

Unemployment benefits protect employees who become involuntarily unemployed through no fault of their own.  Employees are entitled to unemployment benefits regardless of whether they are paid by a salary, hourly rate, piece rate, or commission.

Independent contractors are not entitled to unemployment benefits.  But before you reclassify your workers as independent contractors to avoid the responsibility of paying unemployment benefits, understand that the law classifies workers based on their responsibilities and not their titles.  Independent contractors are in business for themselves and work for a number of different people. They are, as the title suggest, independent in determining how and when to perform their work.  The more control you have over the terms and conditions under which the work is done, the more likely it is that your workers are employees rather than independent contractors.

An employee is entitled to receive unemployment benefits when he becomes voluntarily unemployed through no fault on his part.  In addition, the terminated employee must meet certain requirements to maintain eligibility:

  • Physically able to work – A claimant must be physically able to perform suitable work.
  • Available for and actively seeking work – A claimant must be seeking employment that she is qualified to do in a manner that provides her with a reasonable opportunity to obtain work. A claimant may be denied benefits if she restricts her availability to seek work because of retirement, school attendance, dependents’ care or other family responsibilities, transportation problems, or unrealistic work hours or wage demands.
  • Must not refuse an offer of suitable work – A claimant who refuses a bona fide offer of suitable work without good cause will be denied benefits.
  • “Waiting week” claim – The first week during which a claimant meets all eligibility requirements is known as the “waiting week.”  A claimant is not eligible for benefits during the waiting week.
  • Severance Pay – A claimant is not entitled to receive benefits during any week where he receives severance pay or other compensation that exceeds the amount of the unemployment benefits. 


B.           When Should You Fight an Unemployment Compensation Claim

The employer receives notice when the former employee files a claim seeking unemployment benefits.  A paid claim is charged against the employer’s account, so each paid claim may increase the premium that the employer pays for unemployment insurance.  You should contest claims that are not legally valid to help maintain an appropriate premium rate.

Often it is easy to determine that you should contest a claim.  For example, you should contest the claim if the employee never worked for you, or if he was employed most recently by another company.  Contest the claim if the employee is ineligible for unemployment benefits because she retired, left the job to attend school, or decided to care for family members.  Contest the claim if the employee quit without good cause or abandoned the job. 

An employee is eligible for benefits if she quit for good cause.  For example, if the employee quit because of workplace discrimination or because of intolerable hours or working conditions, she is eligible for benefits.  If he quit in lieu of being fired, the employee may also be entitled to benefits.

A former employee may be eligible for benefits even if he was terminated for cause.  For example, if you hire an employee who seemed to have the requisite skills for the position but in fact did not, the employee is eligible for unemployment benefits. You made a bad hiring decision, and the employee should not be prejudiced because of your decision.  On the other hand, if the employee refuses to do his work, consistently fails to arrive on time (without legitimate reason), or engaged in work place misconduct, the employee is ineligible for benefits.


C.           Key Information to Present Regarding the Initial Claim

Present all information that is relevant to the employee’s eligibility to receive benefits.  The DES form requires you to provide most the information that is relevant to the claim. 

If the employee was terminated for misconduct, thoroughly document the nature and extent of the misconduct.  As noted above, termination for cause is not necessarily termination for “misconduct,” but termination for “misconduct” is termination for cause.  Misconduct includes such things as

  • frequent absenteeism or tardiness without good cause
  • inability to do the job because of intoxication or sleeping on the job
  • insubordination
  • inappropriate behavior, including abusive language, fighting, or harassment of co-workers

Present all relevant evidence supporting your position of misconduct by the employee.  Carefully and thoroughly describe the misconduct; provide copies of documents supporting the claim.


D.           What You Need to Know About the Hearing Process

After reviewing the initial information from the employer and the employee, the Department issues a decision regarding the employee’s eligibility for benefits.  Each side has the opportunity to contest the decision, and the matter is then set for hearing.

The Department mails a Notice of Hearing to each side at least ten business days before the hearing.  The Notice includes the materials that the employee originally submitted to the Department, as well as the Determination of Deputy, which states why the Department ruled the way it did and cites the laws that the Department applied to the case.

The hearing proceeds in traditional legal format, with each side having the opportunity to present its case to an administrative law judge.  The hearing is less formal than in other legal settings, and the rules of evidence are relaxed.  Nonetheless, all testimony is taken under oath.  You are not required to have an attorney represent you in the hearing, though it may be in your best interests to do so in appropriate cases. 

Bring all documents and witnesses to the hearing that are necessary to explain your position. You can compel the attendance of witnesses through a subpoena if necessary. 

The administrative law judge will take an active role in the proceeding by, among other things, asking detailed questions of the parties and witnesses.  She may also explain legal terms to the parties and ask about other sources of evidence that has not been presented at the hearing. 

After the hearing, the administrative law judge will issue a written decision explaining the reasons for her ruling. Each side again has the opportunity to appeal the decision within 30 days of the decision being mailed.


E.           Traditional Ways to Manage Unemployment Compensation Costs

Prudent management practices can help you control your unemployment compensation costs. 

  • Make sure that you are hiring the “right” employee for the position. Institute meaningful procedures to help you interview and hire the most qualified candidates. 
  • Hire employees who are versatile and who can be moved from one department to another.  Transfer employees to other facilities or positions when feasible in lieu of terminating employees.
  • Maintain a good working environment.  Implement and enforce anti-discrimination policies.  Regularly train your workforce about what constitutes illegal employment practices.
  • Document any employee discipline.  If it’s not in the record, it didn’t happen.
  • Promptly respond to any Notices received from the Department.  Appeals the initial decision, if appropriate.


By taking appropriate steps, you can help control your unemployment compensation costs.

If you questions surrounding unemployment compensation benefits and you have determined that you need experienced legal representation, please call 480-733-6800 and ask to speak with Scott Gibson, or visit our website at davismiles.com