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We are often asked by clients whether attending an unemployment hearing is the smart choice. To make this decision, the employer must consider multiple factors to determine the best course of action. These factors include the following:

1. Cost (Claim Value) – Most states use a common “base period” to determine employer liability for an unemployment claim. The base period is defined as “the first four of the last five completed calendar quarters prior to the quarter in which the claimant files their claim for benefits. For example, a claim opened at any time in 2nd Quarter 2022 would have a “base period” that includes wages paid by any employer during Calendar Year 2021.

An introductory employee who has worked less than 3 months who makes an application for benefits immediately upon separation would not have wages in the base period paid by the separating employer. The separating employer would have no liability for the current claim that could negatively impact its tax rate and, as a result, may decide not to incur the costs and business disruption associated with participating in a hearing. Costs include hearing preparation, hearing representation, document collection, time away from other work responsibilities, travel time (in-person hearings), etc.

The longer an individual is employed, the greater the potential cost for a separated employee’s claim. The amount of liability in calculations with an individual’s unemployment claim where multiple employers paid wages in the base period is determined based on the proportion of total wages paid by each employer during the base period.

2. Principle – Unemployment is a safety net funded by employer taxes or by direct reimbursement to individuals who become unemployed through no fault of their own. Employees separated due to misconduct or voluntarily resignation for personal non-work-related reasons were not intended to receive unemployment benefits.

Regardless of cost, employers may choose to participate in a hearing to ensure that all efforts are pursued to prevent benefit payouts to individuals undeserving of the temporary assistance where the individual voluntarily quit or was discharged for misconduct.

3. Combined – Cost & Principle – With both considerations above, there are times where the claim liability may be minimal yet the employer wants to participate due to serious issues surrounding the separation. Such as a discharge based on egregious, willful, and/or intentional misconduct. Likewise, an employer may decide to pursue a questionable case where the cost is substantial but the chance for success may be less favorable.

4. Legal Exposure – Unemployment hearings are quasi-judicial proceedings conducted by state agency Administrative Law Judges, Referees, or Hearing Officers. They may or may not hold judiciary certifications depending on individual state law. Often, states provide free legal access to claimants while employers are forced to hire and pay for their own representation.

Due to the informal nature of hearings, employers may subject themselves to the possibility of other litigation that may include adverse employment claims related to EEOC, wrongful discharge, discrimination, FMLA, to name a few. These situations may ultimately result in substantially more costly outcomes for the employer. Remember, although a decision/ruling may not control civil legal proceedings, unemployment hearings are recorded, and the transcript of both employer and claimant sworn testimony may be used to impeach a witness’s testimony in another legal venue.

Considerations – Do you have:
• Established written policies – Fair, objective, and clear policies that are communicated and consistently enforced
• Signed policy acknowledgment – proof that claimant was aware of the employer policies and disciplinary outcomes signed by employee and reviewer.
• First-hand testimony – Testimony from individuals who directly observed and/or heard the conduct and/or the behavior that resulted in the separation.
• Signed witness statements – Depending on the state, may or may not be accepted based on hearsay objection and will only provide limited value without the author’s participation. Statements must be obtained at or near the time of the event and should be detailed, clear and concise. Such statements also serve to “lock-in” the witness’s recollection of the event and prevent a witness from altering their observations later due to peer pressure or other considerations.
• Witness availability – Critical witnesses may no longer be available to participate and provide first-hand testimony regarding the chain of events due to change in job status, medical leave, separation from the company. This must be taken into consideration to determine if sufficient evidence and testimony are available to present the employer’s case.
• Witness experience – Having an inexperienced, hostile, or questionable witness may result in adverse testimony exposing the employer to unforeseen, unintended, and/or unnecessary costly litigation. If you are in doubt about the best steps to take regarding an unemployment hearing, please seek competent legal counsel.

Have you determined you will be participating in an unemployment hearing?

Join us for our webinar: How to Prepare for an Unemployment Hearing on Tuesday, April 12 at 11amET/ 8amPT


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