How does filing for unemployment affect employer

Although letting someone go during a probationary period will not affect their right to file an unemployment claim by itself, it can help lower the chance that the unemployment claim will involve the employer financially. This factor is very closely related to the length of time worked by the claimant prior to the initial claim.

The higher the wage amount for the claimant during the base period is, the higher the potential chargeback liability will be. An employer's chargeback liability percentage is directly proportional to the amount of wages it reported for the claimant during the base period, measured against the total wages reported by all employers during the base period. If A paid one-third of the wages, it will have one-third of the liability. This factor, along with an employer's chargeback percentage as explained above, determines the amount of the actual chargebacks.

To determine the amount, TWC multiplies the chargeback percentage by the amount of benefits the claimant ultimately draws. If the claimant draws half of the potential maximum benefit amount, each base period employer's liability will be half of what it could have been, had the claimant drawn the maximum potential amount. The nature of the work separation goes directly to the issue of whether the claimant will be qualified or disqualified for UI benefits.

If the work separation was disqualifying, the claimant will not be able to draw UI benefits, which of course will affect the employer's financial liability for the claim. The first thing TWC does in every UI claim after determining monetary eligibility is determine the issue of whether the work separation was voluntary or involuntary, and then whether it was qualifying or disqualifying.

A voluntary work separation is one that was initiated by the employee, and an involuntary work separation is one that was initiated by the employer. The burden of proof on the work separation issue depends upon who initiated the work separation. In a case involving a voluntary work separation, the claimant will try to prove that he or she had good cause connected with the work to quit, and the employer must be prepared to show that continued work was available when the claimant left and that a reasonable employee would not have quit for such a reason.

In a case with an involuntary work separation, the employer has the burden of proving two main things: that the discharge resulted from a specific act of misconduct connected with the work that happened close in time to the discharge, and that the claimant either knew or should have known that discharge could occur for such a reason.

A small company will have a small taxable wage base and will experience a proportionally higher impact from a single UI claim than a larger employer with more employees and a higher taxable wage base. It should be clear from the above information that there are many factors that determine how a given UI claim will impact a particular employer.

What qualifies as misconduct that will disqualify an employee from receiving unemployment benefits? Generally speaking, an employee engages in misconduct by willfully doing something that substantially injures the company's interests.

For example, revealing trade secrets or sexually harassing coworkers is typically the type of misconduct that renders the employee ineligible to collect unemployment benefits.

Other common types of disqualifying misconduct include chronic tardiness, numerous unexcused absences, extreme insubordination, intoxication on the job, and dishonesty. Common actions that often result in firing -- but do not constitute misconduct -- include poor performance because of lack of skills, good faith errors in judgment, inefficient work habits, an unpleasant personality, poor relations with coworkers, or off-work conduct that does not have an impact on the employer's interests.

An employee fired for any of these reasons will usually be allowed to collect unemployment benefits. It is important to remember that what qualifies as misconduct is a matter of interpretation and degree. Annoying one coworker might not be considered misconduct that will disqualify an employee from receiving unemployment benefits, but intentionally engaging in actions that anger an entire department, even after repeated warnings, might be considered disqualifying misconduct.

An employee who quits or resigns from a job will be eligible for benefits only if the employee resigned for "good cause. The law requires the employee's reason for leaving to be "compelling" -- that is, the worker would have suffered some sort of harm or injury by staying.

Put another way, the reason the employee left must be the sort that would have made any reasonable person leave. If an employee leaves a job because of intolerable working conditions such as being sexually harassed or because of being offered the opportunity to quit in lieu of being fired, most states would allow the worker to collect unemployment benefits.

Similarly, leaving a job because it poses a serious threat to the worker's health or safety is usually good cause. On the other hand, most states would not accept leaving a job because it doesn't offer opportunities for career advancement as a good cause, and it won't make a worker eligible for unemployment benefits. Your state's unemployment office -- not your company -- will ultimately decide whether a former employee can receive unemployment benefits. You do, however, have the option of contesting an employee's application for unemployment benefits, and that option gives your company a great deal of power.

In California, for example, the unemployment board presumes that a terminated employee did not engage in misconduct that would disqualify the employee from getting unemployment benefits unless the employer contests the unemployment claim.

Thus, in California, terminated employees who claim unemployment benefits receive them unless the former employer contests the claim. Remember, there is no reason -- and there are no grounds -- to contest an unemployment claim if the employee was laid off.

There are also no grounds to contest the claim if the employee did not engage in misconduct but was fired for lesser reasons -- for instance, for sloppy work, carelessness, poor judgment, or the inability to learn new skills.

Even if an employee engages in misconduct, your company might want to give up its right to contest an unemployment insurance claim as part of a severance package, especially if the fired employee seems likely to sue. In other words, your company would agree not to contest unemployment benefits and the employee would agree not to sue your company.

Your company should contest a claim only if it has grounds to do so -- meaning that the employee engaged in serious misconduct or quit without a compelling reason. And even then, your company should also have a good, practical reason to contest.

Employers typically fight unemployment claims for one of two reasons:. If your company plans to contest an unemployment compensation claim, proceed with caution. These battles not only cost time and money, but they also ensure that the former employee will become an enemy. First, it helps to understand how unemployment insurance is financed.

There is no action an employer can take to affect this rate. The real cost of unemployment claims: increased tax rates. How can employers lower unemployment costs? Back to List. Have Questions for our Experts? Schedule your FREE consultation! Schedule now. Unemployment costs ARE controllable Save time and tax dollars by putting our expertise to work for you.