Appealing Unemployment Claims

Employees who are laid off, fired, or let go for any reason, can file for unemployment insurance compensation. What this means is that based on their salary history with your company, they will be able to collect a check from your state's unemployment office until they can find a job, or based on a period of time set by your state's unemployment laws.

While an ex-employee is receiving unemployment insurance, they are required to search for a job and report to the unemployment office. However, depending where you live, not all unemployment offices stay on top of job-seekers and reporting requirements.

Each state has different laws on how unemployment claims are filed, rules for how the employer responds to the claim, and the appeal process. The US Department of Labor offers a list of each state's unemployment claim offices. To find out your state's rules, visit the US Department of Labor.

Keep in mind that while unemployment laws vary from state to state, they all must follow federal guidelines on employment law as set by the US Department of Labor.

In today's economy, you may find the need to let go of employees due to lack of work. In this instance, if an employee files for unemployment insurance, it's best to let them file because you laid them off due to lack of work – so don't appeal the claim.

On the other hand, if employees are let go for insubordination, violation of company or handbook policies, theft, or other reasons outlined in your employee handbook, if they do file for unemployment insurance, you should appeal the claim.

Upon hiring an employee, make sure you have a well-written employee handbook that outlines how employee warnings and terminations for violations will occur. If you don't have an employee handbook, no matter the size of your company, get one in place immediately. For guidance on how to create one, see this article on what should be included in your employee handbook.

Through your handbook, set rules on documentation of employee misconduct and employee warnings. The biggest mistake employers make is having a documentation process in place, but fail to follow it. Documentation is key if you want to appeal an unemployment claim. If you have no documentation, you will more than likely lose the appeal.

Every business owner is required to report all wages to their state's Department of Labor; this is usually done on a quarterly basis. When you file these reports, your state sets a percentage to determine what amount you pay to the unemployment division along with those quarterly reports.

When you first start a business, your state's unemployment office will set the percentage you have to pay either on similar businesses in your area if you are a new business, or if you purchased an existing business, they will use a history of reported wages.

Say you have quarterly wages of $25,000 and your percentage is 3%. Of that $25,000, you will be required to pay 3% to the Department of Labor until excess wages are reached. Excess wages are set by each state. For example, in New Mexico, every employer must pay their set percentage on all wages until an employee reaches $19,200 in any given year. Once an employee reaches $19,201, these are considered excess wages and are deducted from the total wages paid in any given quarter. These excess wages are not subject to the 3% due to the state.

When an employee files for unemployment and receives it, can't find a job, and continues to receive unemployment compensation, the wages paid out to that former employee affect your percentage. The more ex-employees that receive unemployment, whether they are entitled to it or not, will make your percentage rise. This means that the following year, the percentage you pay quarterly on wages paid will rise. That 3% you initially started with may jump to 5% before you know it. Percentages and how they are increased vary from state to state.

No employer wants to pay large sums to the Department of Labor, especially when it is due to ex-employees who receive unemployment insurance they don't deserve.

Read on to the next page to find out about the legalities of appealing an unemployment claim.