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How to Avoid Unemployment Claims

When employers say they want to avoid unemployment claims, what they really mean is: “how do I avoid having to pay out unemployment claims?” They usually ask this when a claim comes in from a former employee who caused them nothing but trouble!

Though there are things employers can do at this point to better their odds of winning the claim, it’s much more difficult without having laid the groundwork. Avoiding unemployment claims begins long before the claim ever hits your desk.

There are seven proactive things employers should do to avoid unemployment claims:

  1. Hire Smart
  2. Set Clear Expectations
  3. Follow Through on Your Policies
  4. Resist Firing Employees Without Reasonable Warning
  5. Communicate Often With Employees
  6. Document, Document, Document
  7. Keep Up to Date With Regulations

Let’s take a deeper look.

1. Hire Smart

Avoiding unemployment claims starts with having the right person in the right role at the right time. Hire only those workers you absolutely need and who are qualified for the position. When you’re backed up and need to fill a position fast, it’s tempting to hurry to get someone in the seat. But hire in haste and you’ll often repent at leisure!

Workers who “just weren’t a good fit” are usually entitled to unemployment benefits. So are employees who tried their absolute best but didn’t have the ability or capacity for the job. Employees who are laid off due to lack of work are always entitled to benefits. If you make a habit of over-hiring, or hiring unqualified people hoping they’ll come up to snuff, you can expect to pay out claims often.

Every business has employees who seem promising but don’t work out. But if this happens often, it’s time to take a good, honest look at your hiring practices. Do you need a more robust process? Would a proficiency test and/or workplace behavior assessment better inform your choices?

You might consider bringing in an experienced hiring consultant to revamp your process. The investment can pay off in less turnover and, by extension, fewer unemployment claims.

2. Set Clear Expectations

You can’t fault an employee for not meeting your expectations if you weren’t clear on what those expectations were. That goes for job responsibilities, work behavior, performance standards, etc.

Start with the hiring and onboarding process. Provide a detailed description of the new employee’s role and expectations, and have it signed. An employment contract may be appropriate for some roles. Review the employee handbook to make sure the new hire understands workplace standards, policies and disciplinary procedures.

If you need to put an employee on an improvement or progressive discipline plan, this process too needs clear expectations. Make the steps specific and actionable. “John Smith needs to communicate better” is not actionable. “John Smith needs to complete this training course on email etiquette” is. Make sure also that the consequences of not following through on the plan are clearly stated. If you later must fire the employee, you can show that he or she willfully and deliberately chose not to take the steps necessary to keep employment (misconduct), rather than not living up to a vague standard.

3. Follow Through on Your Policies

Too often, employers have a handbook only because they know they’re supposed to. Policies become meaningless if employees see they are never enforced, or are enforced inconsistently. That spells trouble in an unemployment claim hearing.

If you’ve written up and eventually dismissed an employee for a policy infraction that other employees “get away with” or was previously overlooked, you’re going to have a hard time proving your case. Your former employee might argue, for example, that the infraction was an excuse to let him go for another reason that wasn’t tied to misconduct.

You can avoid this by following through on your policies consistently. If you find that a policy isn’t enforced because it doesn’t fit your workplace anymore, don’t ignore it. Update the policy and get employee sign-offs on the change.

4. Resist Firing Employees Without Reasonable Warning

“You’re fired!”

“You can’t fire me, I quit!”

This exchange is funny on TV, but it’s not so funny when it comes to unemployment claims. If you fire an employee impulsively, and/or without reasonable warning, you’ll find it much harder to win the claim. You’ll have to prove that the employee knew or should have known that the behavior would result in immediate termination. That’s much tougher than it sounds. What may seem like obvious misconduct to you may not be so to the employee…or to the third party deciding the claim.

In those tense situations where an employee is driving you crazy, take a step back and consider your options. Would putting the employee on an improvement or discipline plan be more appropriate? Would terminating employment now go against your company’s disciplinary policy? Would you be able to prove the misconduct at an unemployment claim hearing? Is there a way to turn around the relationship with the employee? Even if you do have to let the employee go later, the fact that you tried to preserve the job will go a long way in helping you win the claim.

What about situations where an employee must be removed from the workplace for safety or legal reasons? First and foremost, your priority is protecting your employees, customers and business. Document the incident and get statements from witnesses. If there is a dispute later over unemployment benefits, you can show that the employee’s actions were so bad that any reasonable person would know they could be fired without warning.

5. Communicate Often With Employees

To be eligible for unemployment benefits, an employee must lose the job through no fault of his or her own. That’s much easier for a former employee to show if he or she was completely blindsided by the firing.

This happens because of a lack of communication regarding performance or disciplinary issues. For example, maybe the employee was committing a minor policy infraction that he was aware of, but didn’t realize it was a “big deal” or had any real consequences (the unenforced policies we discussed earlier).

Don’t wait for an annual performance review to discuss issues. An employee should never be unsure about where he or she stands. If needed, put an employee on a written improvement plan with clear objectives. Best case scenario, you turn around the situation and keep the employee. If you do have to let the employee go, your willingness to work with him or her reflects favorably on you in an unemployment dispute.

Open lines of communication can also help turn around other problem situations. If a previously good performer starts showing up tardy or quality of work suffers, talk with him or her. You may find there are situations that you can help alleviate. Is the tardiness or increase in absences due to an abrupt change in daycare? Are they caring for an ill family member? Is there a family emergency that is causing stress? Perhaps a change in shift, or allowing for flexible working hours if possible, would help.

6. Document, Document, Document

Have you heard the saying: “If it’s not in writing, it didn’t happen?” This is so true in unemployment disputes, where it often comes down to your word against the former employee’s. Proper documentation puts proof on your side and can make all the difference in a hearing.

Get it all in writing:

  • employment policies
  • job descriptions/contracts/offers
  • disciplinary actions/writeups
  • improvement plans
  • policy changes
  • resignation letters
  • termination forms (that list the reason for termination)
  • witness statements

Get documents signed to show that the employee reviewed and understood the information.

7. Keep Up to Date with Regulations

Just because you have a policy in your handbook doesn’t mean it will automatically hold up. Employment policies must be reasonable and in line with current regulations in your state. Common employer mistakes include unreasonably restrictive non-compete agreements and drug-testing policies that aren’t in line with state and federal law. Yes, employers have lost unemployment claims involving positive drug tests (which they thought were a slam dunk) because the tests weren’t carried out according to regulations!

Experts such as employment law attorneys and unemployment claims management companies like UIS can review your policies annually and/or following major regulation changes. Yes, it may be an extra investment, but if it saves you having to pay out unemployment claims, it’s well worth it.

Want to make all of this easier? Outsource your unemployment claims management.

As a provider of complete unemployment claims services, UIS can help you craft good documentation and develop HR strategies to prevent unemployment tax expense. We can also do a policy handbook review for you and make suggestions. We are an unemployment cost control company that wins 9 out of 10 contested claims for our clients. Call (816) 524-5999 for a free consultation.

About the Author

About the Author

Jeff Oswald is the President of Unemployment Insurance Services. In nearly twenty years of managing UI accounts on behalf of businesses, he has participated in thousands of unemployment hearings.

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