UI Forum (ADP Unemployment Group)

July-September 2009

Unemployment Claim Win or Loss? - Tips That Can Make a Difference

It can often seem like unemployment claims are difficult to win and that the law favors claimants. While some cases are harder to win than others, employers can prevail in many cases by focusing on three critical areas-effective company policy, proper documentation and disciplinary action. When it comes to managing unemployment insurance costs, it makes "cents" to plan on winning the claim before it's filed.

The first step in establishing effective company policy is to make policies available to all employees immediately upon time of hire. It is also a best practice to have associates sign an acknowledgement that they have received them. Any policy changes should be given to employees right away and another signed and dated acknowledgement should be obtained. Designing company policy with unemployment laws in mind is another best practice. Company policies shouldn't be vague or complicated - they should not be difficult to understand or open to interpretation by workers … or the unemployment agency. When administering, follow the policy as written and be sure all policies are uniformly enforced.

The most critical part of proper documentation is timely record keeping. Documenting warnings and other events at the time they occur or immediately afterward is critical, since details can quickly be forgotten. All counseling sessions and warnings should be documented in writing, even if the action is informal or verbal, and it should be signed and dated by the person issuing it. Any warning or other disciplinary action should clearly specify why it is being issued. A detailed synopsis of the event that occurred should be given, along with the company policy that was violated. The employee should be advised what actions or changes are expected, and what the next disciplinary action step will be, if the behavior is not corrected. Be sure all disciplinary records are legible, since they may be used as supporting documentation at an unemployment hearing.

For unemployment claim purposes, employers should retain employee files, including all documentation, on site for at least 18 months. Files need to be readily available to human resource and management staff, to ensure detailed, accurate and timely responses to claims. Remember that in discharge cases, the employer bears the burden of proof to show the discharge was for good cause as defined by unemployment statutes. A state unemployment agency can issue a finding of misconduct and deny benefits only when clear documentation proving the allegation is provided.

Disciplinary action goes hand-in-hand with company policy and documentation. Corrective steps can vary, but employers should always take immediate action, concisely note any investigation conducted, and keep in mind that a documented disciplinary action where the employee refuses to sign it is still of value when it comes to pursuing an unemployment claim. All disciplinary action should be administered by authorized company personnel. Action should be taken in accordance with company policy and any applicable prior disciplinary steps. Be sure to clearly document, in great detail, the events that lead to the disciplinary action being taken.

Generally, unemployment laws do not specify a set number of warnings to be given prior to discharge, and many employers have either "zero tolerance" policies, or "progressive action" policies, or a combination of both. When it becomes prevailing in the unemployment claim, two important considerations are whether it was reasonable for the employee to expect to be discharged without prior warning for some egregious action or behavior, or whether the employee knew his or her job was in jeopardy if a particular action or behavior continued, because of a prior warning stipulating discharge as an option.

Every employer can improve their ability to prevail in unemployment matters by adhering to policies, advising employees of infractions, and taking appropriate corrective steps. Don't lose a winnable case unnecessarily. Remember, three simple steps will help win the unemployment claim before it is even filed-Effective Company Policy, Proper Documentation and appropriate Disciplinary Action.

State Unemployment Appeals Departments Now Scheduling Saturday Hearings

A number of state unemployment insurance (UI) agencies have recently implemented Saturday hearing schedules. The change is a consequence of the economic recession, which has resulted in an overwhelming increase in UI claims and a growing backlog of related appeals for UI hearings.

States currently scheduling UI hearings on Saturdays are California, Florida, and New Mexico. Each state "dockets" the hearings according to its own set of parameters. Important highlights are as follows:

California: Saturday hearings are being docketed by the Inland and San Diego Appeals Offices of the California Unemployment Insurance Appeals Board (CUIAB), which services the Rancho Cucamonga and the San Bernardino hearing locations, respectively. The CUIAB expects to schedule hearings each Saturday, except July 4, 2009, through the end of August 2009. At that point, the backlog issue will be reviewed and the Saturday hearing dockets will end if the backlog has been sufficiently reduced. For employers that do not normally operate on Saturdays, the CUIAB will consider a postponement.

Florida: Saturday hearings are being scheduled by the Agency for Workforce Innovation Appeals Division. The agency is giving consideration to employers who are not doing business on weekends. If an employer is normally operational on Saturdays, then the state is not likely to grant a hearing continuance or postponement.

New Mexico: The New Mexico Department of Workforce Solutions Appeals Division began docketing Saturday hearings on May 30, 2009, and will continue through July 25, 2009. There will be no hearings on July 4, 2009.

The agency will not grant postponements on the basis that the employer or witness is not available on Saturdays, or because the employer has to pay overtime. Postponements for compelling issues or dire circumstances will have to be requested case by case. Once the case backlog issue is resolved, the appeals division will discontinue Saturday hearings.

Illinois is scheduling Saturday hearings in a few instances, as well as New Jersey on both Saturday and Sunday. Both states are trying to restrict the cases to those that do not require employer participation.

Saturday UI hearings are temporary, but states see it as an efficient method for addressing unprecedented appeal levels without unduly compromising interested parties to the appeal. Employers should anticipate that other state UI agencies may adopt the practice.

Economy and UI Program Efficiency - Hot Topics at National UI Issues Conference

The 28th annual UWC UI Issues Conference was held May 12-14, 2009. This unique national conference is "planned by business for business" and is sponsored by UWC, Inc. - Strategic Services in Unemployment & Workers' Compensation. It brings employers, workforce policy experts, state unemployment insurance administrators, tax directors, attorneys, economists, worker representatives, and third party employer representatives together to discuss the major issues confronting the unemployment insurance (UI) system. Highlights of the conference are as follows:

On the topic of the economy and UI, the consensus of experts is the continued recession will likely mean additional extensions of unemployment benefits like those implemented earlier this year under the American Reinvestment and Recovery Act. Although there have been some declines in new weekly claim filings, it will take time to determine if this is an anomaly or trend. Regardless, weekly continued claims continue to increase, so information on additional benefit extensions could come by early fall.

UI Benefit Fraud and Overpayments is being revisited as a priority for both federal and state UI program administrators. The Treasury Offset Program (TOP) - fraud and overpayment recovery via income tax refund offset - is targeted for implementation in January 2010. Also, as in the past few years, legislation to better detect, deter, and recover overpayments and fraud has been proposed for FY 2010, but has not yet been submitted to Congress.

The President's budget for FY 2010 is expected to contain an Extended Benefit Program Reform (EB) proposal. The recession and the Recovery Act provisions regarding state EB has raised a number of concerns about the effectiveness of the program. Reform will likely tackle issues such as appropriate unemployment thresholds for triggering on extended benefits, the possible need to ease work search requirements during EB periods, and who (i.e., employers vs. state funds vs. federal funding) should pay for extended benefit costs.

High unemployment rates and benefit extensions, brought about by the recession, is prompting interest in better reemployment efforts as a way to reduce the duration of UI benefits. Many experts agree the unemployment agencies should have a goal to connect people to jobs quicker and more effectively. One of the challenges, though, is the UI program has historically been process-driven rather than results-driven. A cultural change is necessary to switch the focus from only how quickly benefits are paid to include how quickly claimants get back to work. Claimants must be held accountable for what they do or don't do regarding work search, and agencies must be willing to disqualify those individuals who are not actively seeking work.

Underfunding of state UI administration costs continues to be a major concern. The gap between the projected and actual dollars needed for states to properly run their unemployment programs has increased in recent years. Record unemployment levels are further straining the underfunded system. Since many believe a new funding framework is necessary, creating a workgroup of UI officials to explore solutions is being discussed.

Any employer may attend the UWC UI Issues Conference. Information about UWC and the 2010 conference can be found at www.uwcstrategy.org.

State Updates

New Hampshire: The New Hampshire Department of Employment Security (NHDES) recently announced there will be no discount rates, a.k.a. fund balance reductions, applied to 2009 employer rates, and in addition, a 0.5% emergency surcharge will be invoked for the second, third, and fourth quarters of 2009 for all employers.

Unemployment Insurance (UI) law grants emergency power to the NHDES Commissioner to add the 0.5% surcharge to every employer's contribution rate in order to protect the solvency of the UI trust fund and preserve merit rating for employers. Although many employers enjoyed a 1.0% fund balance reduction throughout 2008, the trust fund balance has fallen below the level necessary to continue the discount, because of continued high UI claims volumes resulting from the economic recession.

New FY 2009/2010 employer rates, which reflect the emergency surcharge and the elimination of any fund balance reduction, will be calculated by the NHDES and issued in August 2009. FAQs about the emergency surcharge and elimination of the fund balance reduction can be found at http://www.nh.gov/nhes/faq/faq_UIFundBalanceReduction.htm.

Washington: Recent amendments to the unemployment insurance (UI) program impact benefits, eligibility, conformity, and taxes. Highlights of the changes are as follows:

Benefits - The minimum unemployment benefit amount temporarily increases from $129 to $155. Also, the weekly unemployment benefit amount (WBA) increases $45 for all claims filed week ending 5/9/2009 though 1/3/2010. This state benefit increase is in addition to the $25 federal increase that was implemented under the American Reinvestment and Recovery Act of 2009. Therefore, with all of the extra amounts, the minimum WBA temporarily tops out at $225 and the maximum WBA increases from $541 to $611. Neither the federal nor the state increase amounts will be charged to employers' experience rating accounts.

Eligibility - Effective 9/6/2009, a voluntary quit with good cause will be limited to the reasons specified in the UI statute. These reasons are: accepting a bona fide work offer, illness or disability, or death/illness/disability of an immediate family member, moving to accompany a transferred military spouse, domestic violence/stalking, pay reduction/hours reduction of 25%or more, worksite change, unsafe working conditions, uncorrected illegal worksite activities, work-related changes that violate sincere religious or moral beliefs, and entering an approved apprentice training program. The emergency rule that granted the unemployment agency discretion in ruling persons had good cause to quit for reasons not listed in the statute will not be renewed.

Also, for separations on or after 9/6/2009, persons will be deemed eligible for UI benefits if they quit to follow a spouse or domestic partner, due to the spouse's/domestic partner's employment in a different labor market.

In addition, individuals will not be disqualified from benefits if they simultaneously worked a full-time and part-time job, and quit the part-time job, then lost the full-time job, but did not know in advance that the full-time job was ending.

Relief of benefit charges can be requested if an employer must lay off a worker who was hired to replace a military service member, and that former employee returns to work from such service.

Conformity and Taxes - Beginning with the 2010 tax year, the payment of UI benefits will be based on earnings in the two highest quarters in the base period, and benefit charging to employers will be based on this same calculation. This change resolves a UI law conformity problem and preserves federal tax credits for employers.

Also, starting with the 2010 tax year, rates are reduced by 0.02% to 0.55% for classes 2 through 39. The cap on most employers' experience-rated tax and social tax will decrease from 6.5% to 6% (the cap for certain agriculture, fishing and forestry employers decreases from 5.7% to 5.4%), and the minimum flat social cost factor schedule will be revised.

West Virginia - Recently enacted legislation increases the unemployment insurance (UI) taxable wage base from $8,000 to $12,000, beginning the second quarter 2009. Going forward, the taxable wage base will increase or decrease by the same percentage as that of the state average weekly wage, but will not be less than $9,000 if the UI trust fund balance is at least $220 million as of February 15 in any given year.



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