Skip to main content


By March 9, 2021March 30th, 2021Blog

Whether it’s downsizing and layoffs, a resignation, or something more specific, losing an employee can create stress and an unpleasant workplace environment. Depending on the situation, what follows can be equally stressful. Any time a person becomes jobless or under employed, he or she can file for unemployment benefits. However, not every former employee is entitled to receive unemployment benefits. The determination of the former employee’s eligibility is up to the laws of the state in which the claim is filed. However, the information or lack thereof provided to the state by the employer, in response to the claim, will have a direct impact on whether or not benefits are paid.

It seems like it should be straightforward. A person is laid off or terminated for minor infractions and they get paid. Someone who quits or is terminated for misconduct shouldn’t. Someone files a claim for benefits, the organization contests and it’s all over. It’s not always that easy and there are some gray areas with both the misconduct allegation and the concept of quitting with good cause.

Example: The power of social media.

Let’s say a person, after work hours, from home, posts something on the Internet that is deplorable and offensive to a number of people. Even though that person is not representing their employer, other Internet users have traced the employee back to their place of employment. They are now bombarding both the organization with information about the employee and the on-line escapades as well as leaving negative reviews about the organization for associating with the employee. The employee is immediately terminated.

Does that employee qualify for unemployment benefits?

Possibly. There have been cases throughout the country similar to our scenario that have allowed benefits for the employee – and not. If the former employee files for benefits, the organization has some decisions to make. Contesting an unemployment claim requires work on the part of the company or organization. Proper documentation and details are required to support the position of why an individual should not be eligible.

Notice of Unemployment Claim Filed

It all starts with a Notice of Unemployment Claim Filed. An organization needs to reply promptly to the notice with correct information regarding the employee’s wage information and the
cause of unemployment—sometimes referred to as separation—which will fall into three categories: layoffs, discharge, and voluntary quit.12 Any organization receiving claim filed paperwork should pay attention to the deadlines provided on all notices from the state. The response needs to be timely since Unemployment Agencies must move quickly to pay someone who is out of work. Therefore these notices and deadlines often have a quick turnaround, 13 in some places it’s ten days to respond.14 Also, due to unemployment insurance integrity laws, failure to respond accurately and timely could result in the employer being penalized in the manner of monetary penalties and loss of rights – like not being able to appeal a decision.

Employers should provide all the documentation they have to support the termination within the time allotted by the state. If the reason for separation was a voluntary quit, a copy of the
letter of resignation and/or details regarding the reason for quitting need to be provided. If the individual was discharged, the documentation should include the date and specifics of the final
incident that led to the termination as well as copies of prior related warnings. Additionally, it is important to include copies of signed acknowledgments of the rules and regulations that may have been violated. Proper disciplinary paperwork becomes key when fighting a claim. A good paper trail is sometimes the only thing that can protect an employer from an unwarranted claim for benefits.

If benefits are awarded to the separated employee, the organization can appeal the determination. The unemployment insurance statures in that state that apply to the reason for separation will still ultimately determine if that claim will move forward or be denied.

The state will issue its decision via an “initial determination” (each state calls it something different) to both parties. Either side can appeal the determination if they have met all the state deadlines for accuracy and response. The next step will typically put the case before an administrative law judge or referee (every state uses a different term). Some states, such as Florida, require a request for redetermination before one can appeal to a hearing. A Notice of Hearing will be sent to each party that provides the vital information about presenting information to the judge. It will include the date, time, place and the applicable unemployment statutes that will be discussed.

Prior to the hearing, the only information the judge will have is what was submitted for the initial determination. The notice of hearing will provide instructions as to the ability to submit additional documentation for the hearing. If those instructions are not followed, the judge will not be able to consider the additional evidence that may be needed to support your case.

If an organization fails to file the proper paperwork or have a representative attend the hearing, then the only additional information the judge will have access to is that which the employee presents and what was made available during the initial determination. Once the case gets to the judge, it’s not normally possible to submit information at a later date.

The parties will be notified of the judge’s decision in writing. This decision can be appealed to a Board of Review. In some states there may be additional avenues of appeal through the state’s judiciary system.

Prepare for claims before they occur

Nonprofit organizations are not required by law to pay the state unemployment insurance tax on each individual employees’ taxable wages as offered by the state in which they operate. However, they are required to pay for unemployment claims, so those that choose not to pay the state unemployment insurance tax must reimburse the state for any claims paid by the state. If a 501(c)(3) organization does not pay the state unemployment tax and has no claims of unemployment filed against it, it doesn’t have to pay any money to the state.

The best way to avoid unemployment liabilities is to not have claims filed against you. While there is no sure-fire way to completely avoid a claim, there are some practices any organization can put into place to help lessen the chances of a claim or be better prepared to fight those that need to be contested. It all starts with the hiring process.

  • Every job within an organization should have a clear job description. Each new hire should be provided a copy of the job description and it should be thoroughly discussed and reviewed with that new hire.
  • Every person within the organization should be provided with an employee handbook that details expectations of employees, as well as the order of disciplinary measures taken before a termination. Every employee should sign an acknowledgment form that they have received the handbook. (If an employee refuses to acknowledge the handbook, note that an attempt was made to obtain acknowledgment.) The application of the rules and expectations should be consistent.
  • Document everything, from the basic information such as date of hire and pay scale, to unsatisfactory work performances and the aftermath—including warnings and suggestions for improvement.
  • If need be, provide a written plan for improvement with specific problems to address, clear objectives to be met that should solve the problem, and deadlines for each. (Keep a copy for the personnel file.)
  • If an employee leaves a job, obtain a letter of resignation or document an attempt made to obtain a reason. Even if no letter of resignation is provided, an employer should document the reasons given as to why the person is resigning.

The documentation of everything may seem tedious and time consuming, but it necessary in order to protect the organization and it can also cut back on some of the stress that arises when contesting a claim for unemployment benefits, especially if that claim goes before an administrative law judge. Consider it part of unemployment insurance—for the organization.

501(c) Agencies Trust has been helping nonprofit manage their unemployment claims for nearly 40 years. Contact us and see how we can help your organization.

Join the discussion One Comment

Leave a Reply