Understanding the Unemployment System & Controlling UC Costs

1. Understanding the Unemployment System Controlling UC Costs Session Title Presented by: Rachel Moore Date: 9/1/2017

2. Who Is Eligible To Collect Unemployment Compensation Benefits? An individual that has been separated from their employment through no fault of their own. • An individual may be eligible for UC benefits regardless of whether the separation was due to a quit or discharge. • The facts resulting in termination will be a key part in determining if the person lost their job through no fault of their own and if they are eligible for UC benefits.

3. Why Bother with Unemployment Claims? BECAUSE EMPLOYERS LIKE YOU PAY THE BILL! • The employer pays the State for every dollar paid to a claimant plus replacement tax. • A single CA claim can cost up to $23,400. • Once a claim is lost the employer is exposed to the maximum liability for that claim. Ultimately every separation represents a real cost!!

4. Section 252 Legislation’s Impact • Enacted federal legislation (the Federal Trade Adjustment Assistance Extension Act of 2011) included a mandate for states to make important changes to their unemployment compensation laws. Commonly referred to as "Section 252" or "UI Integrity" laws. • Every state is required to enact legislation consistent with Sec. 252 effective on or before Oct. 21, 2013. • If a state does not enact such legislation, they will risk losing full FUTA tax credit eligibility for all of the state's employers.  • Generally, Sect. 252 aims to hold employers financially responsible for overpayment of UI claims that are due at least in part to the employer's actions.

5. Separation Types For Purposes Of Unemployment Compensation • There are basically three types of employment separations that occur: • Lack of work • Voluntary quits • Discharges

6. Lack of Work

7. Reduced Hours • Employees are deemed eligible unless it can be shown that it was the employee’s choice to restrict their hours. • If it’s the employee’s choice, make sure to get in writing the reason why they chose to work part-time. • If there is work available, try to provide them with more hours.

8. Offering Additional Hours • If you offer employees working less than full time additional hours and the offer is refused, notify HR with the following information: • When, Who, and How was the job offer made? • Scheduled hours • Reason why the individual refused the offer (Don’t forget to obtain in writing the reason for refusing hours).

9. Still Working/Employed These are actionable claims and a response is recommended.

10. Voluntary Quits • The former employee must prove the quit was with good cause in order to receive benefits. • It is necessary that the employer attempt to obtain the reason for the quit in writing whenever possible. Important Note: If claimant gives notice to quit and you terminate before the last day of the notice the State no longer views this as a quit, but as a discharge.

11. Quits Not Considered For Good Cause • Examples of quits not considered good cause: • To attend school • Seeking other employment • Quit in anticipation of discharge or layoff. • Quit to retire when continual employment was available. • Quit instead of accepting a reasonable solution to a problem.

12. Is It Really Good Cause? • Show that the claimant did not seek or accept a reasonable solution other than quitting continual employment. • Refusing a leave of absence offered by the employer without good cause. • Refused to communicate with the employer regarding issues that prevented them from continuing their employment. • The claimant in general did not explore all reasonable options before quitting. The underlying concept here is to communicate and accommodate when possible.

13. Discharges For Misconduct There are four basic elements that prove misconduct from an unemployment perspective: There existed a material duty owed to the employer that the employee was aware of. There was a substantial breach of that duty. There was a disregard of the employer’s interest. Breach of duty was a willful or wanton disregard of the employer’s interest.

14. Examples Of Misconduct • Recurring negligence after prior written warnings with proven ability to do job correctly. • Avoidable absenteeism or tardiness after prior written warnings. • Failure to follow reasonable instructions after prior written warnings. Gross Misconduct: A crime or felony in connection with the worker’s work or negligence/carelessness which the employee should have reasonably known would result in great financial loss to the employer or perhaps jeopardize a life.

15. Discharges Not Considered Misconduct • Poor job performance due to inability. • Did not pass introductory period. • Unavoidable absenteeism (sickness, childcare issues) • An isolated (one-time) error using poor judgment that did not expose the employer to real injury. • Repeated violations of policy without prior warnings. • Final incident leading to discharge was unavoidable. • Mutual agreement to terminate.

16. The Keys To Winning Discharges for Misconduct The employer must carry the burden of proof that the discharge was for misconduct: Written warnings that comply with Company policy. Acknowledgement of Receipt of Company policies. Witness(es) statement, when applicable. Other documentation that supports your position. Documentation DocumentationDocumentation! The State gives the benefit of the doubt to the claimant in instances without documentation.

17. Why Discharges For Misconduct Are Lost • When the discharge does not have one of the four elements of misconduct (Basic Elements of Misconduct). • When the final incident leading to discharge was unavoidable or out of the employee’s control. • Example: Employee had excessive attendance issue but the final incident the employee called out sick. • If the discharge is delayed a significant amount of time without a reasonable explanation. • In general any delay in excess of two weeks from the incident that lead to the decision to terminate. • If there is no defined final incident. • Example: Multiple reasons/incidents were listed on the termination paperwork.

18. State of Unemployment Unemployment Trust Fund Solvency • California and the Virgin Islands are the still borrowing funds as of August 31, 2017. The remaining states and Puerto Rico have repaid their loans or are in the process of doing so. • As a result California and the Virgin Islands will see an additional 0.3% offset credit reduction for 2017 (an increase in FUTA tax of approximately $21 per employee). Currently the projected 2017 costs per employee for California and the Virgin Islands is $189.

19. Thank You!