UI Forum (ADP Unemployment Group)

October-December 2009

Considerations When Documenting Performance-Related Separations

Whenever documenting a job separation, employers should exercise caution using the terms "unsatisfactory" or "poor" as the reason for the separation. This is also true when documenting disciplinary actions or any other notes for the employment file. In the context of performance-related separations, there is often a fine line between being capable but not doing a job, and mere inability to perform the job.

Unemployment insurance (UI) benefits are designed to be paid to persons unemployed through no fault of their own, i.e., no willful misconduct or actions by the worker. The worker who accepts employment with good intentions of doing the job, but who is simply incapable of performing to company standards, or lacks satisfactory skills or experience will generally be found eligible for UI benefits. This is because there is no willful misconduct that created the unsatisfactory performance, but rather simply inability. State UI laws and precedent cases seek to distinguish the concepts of inability versus misconduct, as evidenced in the following excerpt from a court ruling:

[…] there is an element of intent associated with a determination of misconduct; mere inefficiency, unsatisfactory conduct, failure of good performance as the result of inability or incapacity, inadvertencies, ordinary negligence, or good-faith errors in judgment or discretion are not considered misconduct for unemployment insurance purposes unless it is of such a degree or recurrence as to manifest culpability, wrongful intent evil design, or an intentional or substantial disregard of an employer's interest or of an employee's duties and obligations."

Whenever discharging an employee who has demonstrated their qualification for the job and ability to perform satisfactorily in the past, an employer should be careful not to improperly describe or document the situation as "unsatisfactory" or "poor" performance. While the terms may seem appropriate to the situation, if there is actual negligence or dereliction of duties, deliberate failure to follow procedures or other direction, a state UI agency may rule the separation is due to mere inability, instead of disqualifying misconduct. In this instance the claimant would likely be granted UI benefits which could then negatively impact the employer tax rate. Separations must be described accurately, so if intentional failure to perform job duties or wrongdoing exists, it should be documented clearly.

Likewise, an employer who clearly determines an individual is simply not qualified for the job and is unable to meet performance standards, should document records accordingly. UI liability can be minimized in claims where unsatisfactory or poor performance is the issue by separating the person as soon as it is evident he or she will not be able to meet the standards your company requires.

Minnesota Amends Unemployment Insurance Laws

Several amendments to the Minnesota Unemployment Insurance (UI) laws have resulted from the 2009 state legislative session. Highlights of the changes are as follows and became effective August 2, 2009, unless otherwise noted:

Base Period Definition: The term "base period" is defined as the last four completed calendar quarters from the UI claim filing date.

The base period is used to determine if a person earned enough wages to monetarily establish a valid unemployment claim. Previously, the definition was the first four of the last five completed calendar quarters from the claim filing date. Minnesota received Recovery Act funds for amending the base period definition so more unemployed workers could establish UI claims by using more recent wage history.

Compelling Family Reasons: Individuals will not be denied UI benefits if their unemployment is due to the illness, injury, or disability of an immediate family member, whether a voluntary quit or a discharge.

In addition, claimants will not be denied benefits if a voluntary quit or discharge results from domestic violence against the person or his/her immediate family member.

Also, a person will not be denied UI benefits for voluntarily quitting to relocate with a spouse whose job location has changed and it is impracticable to commute.

Lastly, a claimant will not be denied benefits if his/her discharge resulted from conduct that was a consequence of the person's mental illness or impairment.

Employer Appeals: Effective April 1, 2010, agent companies that represent employers in UI matters must file appeals by way of the Minnesota agency's online system.

Wage Request Penalty: Employers may be assessed a $100 penalty for failure or refusal to provide a weekly breakdown of wages to the unemployment agency for any claimant, for purposes of detecting UI fraud.

Voluntary Temporary Layoff: A claimant who voluntarily elects to be temporarily unemployed in order to prevent another employee from being laid off will not be denied UI benefits, as long as: 1) the voluntary election is authorized under a collective bargaining agreement or written employer policy; 2) the employer has accepted the worker's election; 3) the employer provides written certification to the UI agency that the claimant's election prevented another worker from being laid off; and 4) both the employer and the claimant, at the time of election, expect the claimant's unemployment from the employer to be temporary.

Temporary Staffing Services: Language has been added to the "quit" provisions of Minnesota's statutes regarding temporary staffing companies. A worker who leaves the temporary staffing employer to accept a job with the client company will be considered to have quit employment with the staffing service.

Workforce Development Assessment: Effective July 1, 2009 and until June 30, 2011, the Workforce Development Assessment increases from 0.1% to 0.12%.

UI Extension under Consideration by Congress

Federal legislation - HR 3548 - seeks to provide an additional 13 weeks of emergency unemployment compensation (EUC) to workers who exhaust existing EUC in states with an unemployment rate of 8.5% or higher. If enacted, it would raise the total potential weeks of regular unemployment benefits and all federal and state extensions to 92 weeks.

HR 3548 recently passed the House by an overwhelming vote of 331-83, but is awaiting action by the Senate. The bill appears to be stalled because of resistance from lawmakers whose states have unemployment rates below the 8.5% threshold and who are contending their unemployed workers need additional benefits as well. Various Senators have expressed concern that 23 states have a total unemployment rate (TUR) under 8.5%, so the proposed extension would not help those jobless workers. However, lowering the bill's unemployment threshold could be difficult, given that House lawmakers confronted the same issue and ultimately sought to keep the 8.5% threshold, in part, to ensure the $1.4 billion cost of HR 3548 did not add to the deficit.

The proposed benefit extension would use the employer FUTA 0.2% surtax as the primary offset for additional spending. However, business groups are concerned this might signal the beginning of policy and legislative changes that could impact federal unemployment taxes in 2010 and beyond.

The National Association of State Workforce Agencies recently passed a resolution urging Congress to provide up to 13 weeks of additional unemployment benefits in all states and up to 7 weeks of additional unemployment benefits, for a total of 20 weeks, for "high unemployment" states, defined as having an average TUR of 8.5% or more in the preceding 3 months, through December 31, 2010.

Action by the Senate on the legislative proposal for an additional unemployment benefit extension is expected soon.

State by State

California: The California Unemployment Insurance Appeals Board (CUIAB) recently held a public hearing as part of the rulemaking process for a regulation amendment which would expand utilization of unemployment hearings conducted by telephone. Earlier this year, Gov. Schwarzenegger directed the CUIAB to be more efficient, so if the regulation is amended, increased telephone hearings will create efficiencies and reduce costs for the state and employers as well.

Connecticut: The maximum weekly unemployment benefit amount increased from $519 to $537, effective October 4, 2009.

Massachusetts: Effective October 4, 2009, the maximum weekly unemployment benefit amount (not including any dependents' allowance) increased from $628 to $629.

North Carolina: As of August 2, 2009, the maximum weekly unemployment benefit amount increased from $494 to $505.



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