Unemployment Claims (Part II) Figuring Out A Sometimes Mysterious System

By Jonathan K. Driggs, Attorney at Law
Last month we discussed some fundamentals about how the unemployment claim process works.  Let’s face it, we’ve all been stunned by losing claims we thought we should have won.  However, once we figure out how the system really works, the rules applied by the Utah Department of Workforce Services (DWS) become a lot less mysterious.  Keep in mind this underlying principle: for important public policy reasons (like helping people pay their rent and put food on the table), the system is designed to give the benefit of the doubt to the employee. This is simply a reality.

By understanding the bias in the system—and the “quirks” that flow from it—you can better prepare termination situations to minimize the chance of unpleasant surprises while also lowering your unemployment insurance costs.  Following up on last month’s article, here are 3 more “quirks” to be aware of when it comes to how the DWS decides who wins or loses unemployment claims:

  • The Poor Performer.  Let’s say a company hires an employee and despite all the employer can do, the employee never demonstrates that he or she can adequately do the job.  The employer then terminates the employee.  In such a situation the DWS will deem the employee to be eligible for benefits.  Why? Quirk #1: The employer bears responsibility for bad hiring decisions!   Whether we like it or not, this is simply how the system works.  The employer, however, may have a better chance of winning if they can show that the employee did perform at a satisfactory level for a period of time then followed by a decline in performance.
  • New Hire Not Doing Well.  If an employee is found eligible for benefits, the employee’s “base period” determines which employers are responsible for the cost of the benefits (and for what percentage of the cost). The base period is the first 4 of the last 5 completed calendar quarters.  Quirk #2: Employers are charged for benefits only when they appear in the employee’s base period.   So,solely from the perspective of avoiding UI costs, when all signs are pointing to the new hire not working out, you are better off terminating the employee earlier rather than later to avoid base period exposure.  An employer will often not show up in an employee’s base period if the employee is terminated within the first 90 days of employment (i.e., the last of the 5 calendar quarters).  Of course, you should check with legal counsel before you terminate an employee to make sure the termination is lawful—but you will keep your UI costs down by not letting a situation go on that you know is not working out.  However, be sure to see the next bullet for an important caveat.
  • Challenge Eligibility Decisions Now Rather than Later Even If The Employee Can’t Initially Collect.   Let’s say you terminate an employee for violating your policies.  He files for benefits, is granted eligibility (at least initially), but then quickly finds another job (thus he’s not eligible to actually receive the benefits).  The issue is moot—at least you think it is—so you don’t appeal at the time.  Six months later his new employer fires him (and after your experience with him you’re not surprised!)  He files for benefits, is found eligible, and guess what? You’re in his base period with an initial decision of eligibility regarding his employment with your company.  If you try to appeal at this time your request will likely be declined because of a lack of “timeliness” (unless you and your management team can prove you were all in comas and unable to respond when you initially terminated him).  Quirk #3: If you fail to immediately appeal an eligibility decision, you will probably not be allowed to appeal later on.  So, the moral of the story is appeal eligibility decisions when the initial decision is made even if the employee is not currently in a position to collect.

This article should not be construed as legal advice.  Copyright ©2012 by Jonathan K. Driggs, Attorney at Law, P.C.  All rights reserved.

Jonathan K. Driggs is an employment law attorney with over 19 years of experience, including 3 years with the Utah Labor Commission.  www.jkdlawpc.com

Call an HR Attorney as often as you need, for a low, fixed monthly fee!  In partnership with Payroll Experts, Jonathan is offering his “HR Legal Compliance Service” to Payroll Experts clients at discounted rates.  For a low, fixed monthly fee, you can call Jonathan as often as you need to get answers to your HR legal compliance and employee relations questions.  Get rid of the attorney’s ticking clock!  For more information, please contact Payroll Experts at (801) 221-3732 and ask about the “HR Legal Compliance Service.” 

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