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Appealing Unemployment Claims

written by: •edited by: Michele McDonough•updated: 6/12/2010

As a business owner, do you know how to appeal unemployment claims? It's important that you do, especially when the ex-employee doesn't deserve unemployment benefits. Jean Scheid takes a look at appealing unemployment claims.

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    What Is Unemployment Insurance?

    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.

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    When You Should Appeal

    Unemployment Rate 

    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.

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    Why Should You Care?

    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.

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

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    As a business owner, after you've been notified that an ex-employee has made an unemployment claim, you will have a limited time to decide if you wish to appeal the claim or not. If you do decide to appeal the claim, be sure to gather necessary documentation and follow the instructions of the appeal judge to the letter.
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    Rules on Appealing Unemployment Claims

    As a business owner, you will encounter employees who seek unemployment insurance and try and work the system to receive it. In New Mexico, as long as an employee has worked for your company for 3 months, they can apply for unemployment insurance and, if granted, receive payments for up to 39 weeks. In addition, if that former employee gets a job for one week and quits that job, he or she can re-file for unemployment insurance, under your state's employer number, for an additional 39 weeks. All of these payments affect the percentage you pay to the Department of Labor and will increase that percentage dramatically costing you real dollars.

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    employee theft 

    Some states will only allow ex-employees to file for unemployment insurance if they are laid off or let go due to lack of work and do not allow for those employees who quit or are terminated for misconduct to apply. This is not true for all states. Some states allow ex-employees to file for unemployment insurance no matter what the reason – whether it is a voluntary quit, lay-off, lack of work, and even insubordination or violation of company policies.

    When an employee is no longer your employee and does file for unemployment insurance, you will receive a notice from your state's unemployment division. A time period, usually ten days, is given for the employer to respond to the unemployment claim. If an employee was fired or terminated due to violation of company policies or any other reason that you believe he or she shouldn't be eligible for unemployment insurance, do the following:

    1. Gather all the documentation you have on the employee including warnings and termination forms.
    2. Write a detailed letter and include it in your response on why you feel the ex-employee doesn't deserve unemployment insurance and that your state's unemployment insurance account should not be charged.
    3. Mail your employer response within the specified period and send it certified mail to ensure the Department of Labor receives it and you have proof of that receipt.

    Next, the Department of Labor will review your documents. If the unemployment insurance is denied, you will be notified and your account will not charged. If the ex-employee is granted the unemployment insurance, you then have a chance to appeal the unemployment claim.

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    It's Up to the Appeal Judge

    If you choose to appeal the unemployment claim, this is where all that documentation on the ex-employee will play a part. If you have not followed proper documentation procedures, you won't have much in your favor to fight with.

    If you appeal, the process on how to appeal the claim will appear on the documents you received stating the ex-employee is eligible for unemployment insurance. Again, you usually are granted ten days to respond with your intent to appeal.

    When you return the notice to appeal documents, you need not send any additional paperwork at that time, just a statement saying you wish to appeal the unemployment claim. Once the appeal section of the Department of Labor receives the appeal request, you will receive another letter giving the date of the appeal. Read this letter carefully as this describes how and where to send documents on the employee and any other prudent information to the appeal tribunals judge. Keep in mind that whatever you send to the judge, must also be sent to the ex-employer. If the ex-employer sends any documents to the judge before the appeal hearing, he or she must also send them to you. Send everything via certified mail so you have proof everyone has received your paperwork.

    Appeal hearings are usually done by telephone where the appeals tribunal judge will create a conference call with the ex-employee, you and the appeal office.

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    On the next page, we'll look at the formal conduct and procedures associated with an unemployment claim appeal hearing.

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    When you appeal an unemployment claim, decisions are up to the appeal's tribunal judge. In the continuation of this article on how to appeal an unemployment claim, the procedures and conduct for the process are examined.
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    Appeal Hearing Conduct and Procedures

    Once the judge has everyone on the telephone, or in-person at the hearing, he or she will ask a few questions. The judge will inquire on the following:

    The Employer - Who is representing the employer, name and position. If the employer has any witnesses that will appear as well as their name and positing within the company.

    The Ex-Employee - Who is representing the ex-employee (usually it is the ex-employee) and if they have any witnesses.

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      Judges Gavel 

      Documents - The judge will outline in detail all of the documents that he or she has received from the employer and ex-employee and ask if everyone has received the documents. If everyone has, the appeal hearing begins. If you have failed to send documents to the ex-employee, the judge may assign a different date for the appeal or, in some cases, award the unemployment insurance to the ex-employee based on your incorrect procedure.

      Testimony - The judge will first ask questions of the employer and any witnesses for the employer. It's important to note here that appeal judges set guidelines that he or she will explain prior to testimony so follow these rules carefully. Do not interject or interrupt the judge. Every judge will give you an opportunity to make any additional comments where you will be able to point out any specific information you feel wasn't covered in the testimony.

        Your chances on winning the appeal will be based on the following:

        • Your conduct in the hearing, the documentation trail you have sent to the judge, and the expert testimony of your witnesses.
        • The most important issue judges look at when you appeal an unemployment claim is the paper trail of what happened that made you fire or terminate the employee AND, more important, the very last thing the employee did that broke the camel's back so to speak.

        Judges do not care about issues that are not documented or issues that happened with an employee only one time and were corrected. They do care about the paper trail including written warnings and verbal warnings, chances you have given the employee to change, and what the employee did that finally made you feel you had no choice but to terminate the employee.

        To make sure you win your appeal, document unacceptable behavior. Included in our Media Gallery is a great employee warning template. Have supervisors or a witness sign employee warnings. Have the employee sign the warning and give them a copy, and maintain a good paper trail on the employee's non-performance.

        To learn more on appealing unemployment claims, visit your state's Department of Labor office and educate yourself further by downloading and reading the Employer's Guide to Unemployment Insurance in our Media Gallery. This document is based on Texas state law, however it contains helpful information on unemployment insurance, how it works, and employer's rights.