How can I prevent unnecessary unemployment costs?

All jobs eventually must come to an end!  This makes each new worker a potential unemployment claimant.  Therefore, when you make your first contact with each applicant you should begin giving consideration to the factors that will help you minimize unemployment charges.

The first step to controlling unemployment compensation costs is for the employer to hire the best qualified applicants.  This requires that you thoroughly check each applicant's background before they are hired.  Workers that are well suited to the job are obviously likely to stay much longer.  Employers save unemployment benefit costs, in large part, by avoiding job separations.

The second step is to give each employee proper orientation and training.  Any future unemployment case could hinge upon your ability to prove that the worker was properly prepared and trained.  Have the worker sign-off on all training courses and orientation material they receive, including such items as your employee handbook and/or lists of your organization's rules and standards.

Weed out unsatisfactory workers as soon as it becomes obvious that a hiring error has been made.  Discharging workers that are unable to meet the employer's reasonable expectations will generally make him or her eligible for jobless benefits.  In most states, however, the amount of potential liability on unemployment claims is limited to a percentage of wages each employer paid during the base period.  The best way to protect against unnecessary charges from such separations, therefore, is to assure that the unqualified worker is terminated as soon as their inability to perform their job functions has been confirmed.

Making early decisions about whether a new employee is qualified is even more important in last employer states.  A "last employer" state is a state in which the entire claim is charged to the last employer; Georgia, Illinois, Kentucky, New Hampshire, Rhode Island, South Carolina and Virginia are all "last employer" states.  In these states, employers should give consideration to discharging unsatisfactory employee before they have worked for your organization long enough for it to qualify as their "last employer".  If you have workers in any of these states, we suggest that you call these state agencies and ask them for their exact definition of a "last employer."

Protecting your account in "last employer" states (those states that charge the entire unemployment claim to the last employer) calls for early decisions about whether to keep new employees.  For example, Illinois defines a "last employer" as the employer that last provided the claimant with 30 days of employment (whether in the base period or not).  In addition to paying for the entire claim, an Illinois "last employer" that pays wages allowing an individual to requalify for benefits after a disqualification will be charged, even if the 30 day definition is not met.

Whenever you make changes to your rules or requirements, be sure that you have all workers acknowledge in writing that they understand these new expectations.

Whenever it is necessary to warn or counsel a worker, it is essential that a proper written record be kept.  This is true even when your policy allows you to give verbal warnings.  Your written record should include the basic facts concerning the warning or counseling session.  Be sure to include the action (if any) that the worker agreed to take to correct the problem.  Verbal warnings or counseling sessions still need to be recorded.

When feasible, have another manager or supervisor observe your counseling sessions.  This could be important later when the worker gives a different version of your meeting to the state unemployment agency.

The worker's signature on a written warning is helpful, but lack of a signature can be overcome.  If you ask the worker to sign the warning or counseling notice and they refuse, whenever feasible, you should have another supervisor sign the notice: "Witnessed by (supervisor's name) on (date)."  Another alternative is to give the worker an opportunity to write an explanation on the back of the form stating why they chose not to sign the document.  The worker's writing on the back will serve to establish that he or she was notified of the performance deficiency.

Go by your book.  You can't justify discharging an employee unless you followed your own rules.  For example, if your rules specify that individuals are entitled to three warnings on specific types of infractions before they are discharged, be sure that they receive three warnings (and are discharged only following the fourth infraction).

Make sure you have the facts before you discharge an employee, but don't delay taking action.  Your failure to act immediately may be interpreted by the state agency as condoning the act.  Conduct a careful investigation before you discharge a worker.  If necessary, give yourself time by quietly suspending the worker during your investigation.  This will also help to make it clear that you are not condoning the worker's actions.  Give the worker an opportunity to fully explain his or her behavior before you decide to end the employment relationship.  Talk to all witnesses that observed or heard the alleged misconduct, not just to volunteers.  If your investigation exonerates the worker, be prepared to return the worker to the job with full back pay for any wages that were missed during your investigation.

Don't play favorites.  Failure to reprimand your favorite worker for rule infractions can seriously undermine your rules.  In order for the state unemployment agencies to take violations of your rules seriously, you must be able to show that they are consistently enforced.

It is important to make a written record of each infraction.  Managers and supervisors generally overestimate their ability to remember events.  Even if you can recall the events perfectly, without a record you will not be able to prove that the worker has been put on notice.  Don't expect your assertion that the worker was counseled to overcome the former worker's denial; these statements may be dismissed by the state as self-serving.  If you are required to attend a future unemployment hearing, you will need written records to support your testimony.

Disclaimer:  The information contained in the examples given on this page is general in nature and is not intended as legal advice.  There are no guarantees that a particular state unemployment adjudicator will rule as others have in the cited examples.  Individuals seeking legal advice concerning the handling of similar matters should consult with their attorney, rather than relying upon the information given.

The purpose of this document is to educate clients and potential clients about unemployment compensation. While some effort has been made to address the many differences in laws and procedures in the 53 different jurisdictions (each of the fifty states plus Puerto Rico, Washington D.C. and the Virgin Islands), the primary purpose of this presentation is to review some basic principles shared by many jurisdictions.