In the past months, I have received several inquiries from small business owners whose ex-employee filed for unemployment benefits despite either being terminated for cause or quitting. The employers were surprised on receiving the unemployment benefits claim letter from the Employment Security Department (ESD) because it is widely believed that only workers who are laid off from work can claim unemployment benefits.
Small business owners should be aware that ex-employees could qualify for unemployment benefits if they quit for “good cause”. A bill (SSB 5963) passed by the Washington legislature in 2009 restricted "good cause" to the following:
1) where an individual left for a bona fide work offer that fell through;
2) if the separation was necessary because of the illness or disability of the employee or their immediate family member;
3) the employee had to relocate due to a military spouse’s mandatory transfer;
4) if the separation was necessary to protect the employee or their immediate family from domestic violence or stalking;
5) if the employee’s compensation was reduced by 25% or more;
6) the individual’s hours were reduced by 25% or more;
7) if the individual’s work site changed and the change caused a material increase in the distance or difficulty of travel and if the change caused a commute that was greater than “customary” in that line of work;
8) if the work site safety deteriorated, but only if the individual reported it to the employer and the employer failed to correct;
9) if the individual left due to “illegal activities” in the workplace, but only if the individual reported it to the employer and the employer failed to correct;
10) if the individual’s usual work was changed to work that violates the individual’s religious convictions or sincere moral beliefs; or
11) if the individual left to enter a state approved apprenticeship program.
Moreover, some ex-employees file an unemployment claim despite being terminated for cause. In such situations, the employer has to demonstrate to the ESD that the employee had been fired for misconduct. “Misconduct” is defined as a willful or wanton disregard for employer’s business or co-workers. Misconduct includes insubordination, dishonesty, violation of reasonable company rules, and repeated inexcusable absences or tardiness. The standards adopted by the Employment Security Department for demonstrating misconduct are pretty strict. For example, a single incident of misconduct that did not pose a substantial harm to the company would not be considered a good cause for termination.
The rise in unemployment claims through such tactics would hurt small businesses even more in 2010 because it leads to an overall increase in unemployment tax rates. The unemployment tax rate is based on an individual employer’s history of laying-off workers as well as the social cost tax (i.e. tax attributable due to overall increase in unemployment benefits being paid by the State). Even if the small business did not have any unemployment claims in 2009, its unemployment tax rate will increase due to increase in social cost rate based on the rising total unemployment claims.
Small businesses can take some steps to contain both their experience rating and the economy’s overall social cost tax. For example, documenting the employee’s termination for cause and misconduct could help build evidence for refusing or appealing the employee’s unemployment claim. Following are some additional steps:
1. Conduct exit interview where you discuss the reasons for termination of employment; document it & if possible, get the employee’s signature
2. Draft a termination letter with details of the specific conduct
3. Document every employee misconduct even if not currently related to termination (but could be the basis of termination later)
4. Include evidence of misconduct when responding to the Employment Security Department’s letter, including termination letter, exit interview document, and statements from other employees who witnessed the misconduct
5. If the ex-employee had voluntarily quit, provide details to the ESD on the reasons stated at the time of quitting. If the employee is claiming illegal activity in the workplace or constructive termination, state whether the ex-employee had ever complained of any wrongdoing on company’s part and the steps taken to address the complaint.
Lastly, I encourage you to to get legal representation for the unemployment case hearing. Lawyers at Auxilium will be able to help you prepare for the case through witness statements, collecting the appropriate evidence, and effective presentation of your case during the hearing. The administrative determination of facts is generally conclusive , unless it be wholly without evidential support, or wholly dependent on a question of law, or clearly arbitrary or capricious. The ALJ's findings are crucial in an appeal to the Superior Court. Thus, the earlier you involve legal counsel in the case, the better.