By Matt Anderson on June 13, 2017

Employers large and small regularly turn over employees. Employees quit to take care of their families, resign to take other jobs, or are fired.  Also, many employers, particularly ones whose employees are unionized, will lay off or suspend employees.  The reason for the permanent or temporary separation can be crucial in determining the employee’s eligibility for unemployment benefits.  While employers do not directly pay unemployment benefit claims, the number of successful claims affects the employer’s unemployment tax liability.

All 50 states, Washington D.C., Puerto Rico, and the U.S. Virgin Islands have some form of state-run unemployment benefits.  In every state, if an employee is terminated for cause it affects his or her ability to collect unemployment benefits.  In some states, it completely disqualifies the employee; in others it limits his or her benefit award.  Also in every state, if the employee voluntarily leaves (i.e., quits) without good cause (for no good reason), then he or she is barred from receiving benefits.

Each state, however defines differently what a disqualifying termination for cause is and what is good cause for quitting. Most states find that terminations resulting from drug or alcohol issues (like showing up intoxicated, or refusing a drug test) are for cause.  But Oregon, for example, will grant benefits to an employee who enters a drug or alcohol related rehab program within 10 days after such a discharge.  States like Virginia, North Carolina, and Michigan cite absenteeism as a cause for termination affecting an employee’s ability to collect benefits.  California and Pennsylvania find employees who are terminated due to a criminal conviction cannot receive benefits, while many others disqualify employees who commit crimes in the workplace (whether those crimes are prosecuted or not).  All states have a general disqualifier of termination for misconduct (but again each state defines misconduct differently).  Then there are unique disqualifiers, such as in Ohio and West Virginia where resigning to marry or attend to family or personal matters is the equivalent of voluntarily leaving without good cause.

While there are many common threads among the various states, each state’s disqualification standards are different. Employers need to know what reasons for separation hinder or preclude an employee’s claim for benefits.  It is important that employers consistently and accurately document all reasons for separation.  This includes temporary separations, like suspensions and labor disputes, because some states will pay benefits to temporarily unemployed workers.  Many of these states will not pay benefits to employees subject to a disciplinary suspension or out of work due to an on-going strike.   One word of caution that cannot be stressed enough, however, is this documentation of the stated reason for separation must be accurate.  If an employer creates a pretextual reason for termination, so as to hinder an employee’s ability to obtain unemployment benefits, it could expose itself or undermine its defense to claims of discrimination in that same termination.  An employer does not want to win the small victory of denying a former employee unemployment compensation only to find itself significantly hampered in responding to a discrimination lawsuit.

In summary, employers need to know their state’s reasons for disqualification, accurately document reasons for separation, and thoughtfully challenge unfounded unemployment benefit claims. If you need assistance is compiling a list of disqualifying reasons for your state or states, or if you want to discuss whether and how to fight a claim for unemployment (in light of other, perhaps bigger concerns), please do not hesitate to contact us.  We will be glad to assist you.