How to Better Defend Unemployment Claims

Rebecca L. Dobbs, Esq. – Attorney,SmithAmundsen LLC

Gregory J. Ramel, Esq. – First Deputy Legal Counsel, IDES

August 6, 2012

Unemployment Jurisdiction

IDES has jurisdiction to determine and assess employer contribution rates and to enforce its determinations and assessments through its internal review and hearing process

IDES also has jurisdiction over benefit payments and disbursement – complete authority over determining benefit entitlements, subject only to judicial review by the appropriate circuit court following the exhaustion of all administrative remedies

Employer Interests in Enforcing UI Laws

Employer contribution rates based in most part upon company’s experience rating, benefit charges and wages paid.

Employer’s financial interest to challenge claimants when appropriate to disqualify a former employee from benefits

Preventing unwarranted claims keeps an employer’s benefit charges and rates low which helps keep the lowest contribution rate possible, and the lowest quarterly payments as possible.

Employer Funding

Unemployment insurance compensation fund is largely made up of a payroll tax paid by employers on a quarterly basis

No payroll deductions are made from a worker’s wages to subsidize the unemployment insurance compensation fund

Amount an employer pays depends on: Size of employer’s workforce & number of former

workers receiving unemployment benefits Employer’s experience rating

Employer Funding (cont.)

Rates Maximum Minimum Taxable Wage Base

2011 8.40% 0.70% $12,740

2010 7.25% 0.65% $12,520

2009 6.80% 0.60% $12,300

Thanks to IL Chamber and others… (SB 72/PA 97-621):

Section 235 (820 ILCS 405/235):Sets the taxable wage base as follows: Calendar Year Taxable Wage Base

2012 $13,5602013 $12,9002014-2019 $12,960

Section 1506.1 (820 ILCS 405/1506.1):Sets an employer’s minimum rate at zero for calendar years 2012-2019. Max rates begin in 2012 at 9.45% (including fund building rate).

Section 1506.3(820 ILCS 405/1506.3):Sets the fund building rate at 0.55% for each calendar year when on October 31st of the prior calendar year, there are outstanding bonds underthe UI Trust Fund Finance Act.

Stages to Monitor Unemployment Rate/Claims

Initial Claims by individual employeesQuarterly Charge Benefit StatementsAnnual Rate Notice

Quarterly Benefit Charge Statement

Annual Rate Notice

Employee Eligibility

Sufficient Base Period Wages in Covered Employment

Registration and Availability for WorkReasonable and Diligent Search for

WorkPeriodic Certification of Benefits Claimed

Disqualification of Otherwise Eligible Employee

Complete or Partial Disqualification

Partial Disqualification Arises primarily from income earned by a claimant

during receipt of benefits If a claimant earns more than 50% of his “weekly

benefit amount,” the amount of benefits he or she is eligible for decreases correspondingly

Complete Disqualification If a claimant earns the same or more from other

“employment,” then he or she is disqualified from receiving benefits for that week.

Discharge for Misconduct

Termination for misconduct renders an employee ineligible for benefits until he or she is re-employed earning at least the same weekly benefit amount in each of at least 4 weeks

Misconduct – deliberate and willful violation of a reasonable work rule or policy of the employing unit, governing the individual’s behavior in the performance of his work, provided such violation has harmed the employing unit or other employees or has been repeated by the individual despite a warning or other explicit instruction from the employing unit

Determining Factors for “Misconduct”

Must be related to the employment having a harmful effect on the employer or other employees

Must be deliberate, willful, or with disregard for the employer’s interests

Actions which demonstrate an employee’s willful or wanton disregard of an employer’s interests revealed by deliberate violations or disregard of standards of behavior which the employer has the right to expect of its employees or in carelessness or negligence of such degree or recurrence as to manifest equal culpability

Attendance as Misconduct

Attendance Problems Usually involve violation of abuse of employer’s

attendance policies Example 1:

Man receives a call at work from his wife telling him she is divorcing him. Man immediately clocks out so he can go home to talk to his wife. Supervisor sees him clock out and asks him why he’s leaving. Man refuses to tell his boss anything. The next day he is fired.

Misconduct? Yes – but only because he refused to tell his

supervisor why he was leaving.

Attendance as Misconduct (Cont.)

Example 2: Employee gets arrested, locked up and can’t make

bail. He can only make collect calls. He sends a letter to his employer explaining his situation and receives no response. He has no family or friends to follow up with his employer. He is locked up for 9 months until his trial at which he is acquitted. He then contacts his employer who tells him he was replaced because he was absent from work without notice for 5 consecutive days. Misconduct?

No – The employee tried whatever he could to notify his employer.

Insubordination, Harmful Attitude Lack of Professionalism as Misconduct

An employee may argue with a superior so long as it is not disparaging or disruptive Critical component is whether there is intentional

disregard of an employer’s interests

Abusive language is generally considered insubordination and misconduct Words are considered insubordinate and abusive

where they violated the behavior standards an employer has a right to expect from its employees

Dishonesty, Theft or Felony Conviction as Misconduct

Benefits prohibited where an employee is terminated because of the commission of a felony or theft committed in connection with work.

Disqualification for termination due to a felony or theft Employer must have no involvement or responsibility Employer must have notified the IDES of the possibility of a

felony or theft within 10 days following the employee’s next claim for benefits

Employee must either: 1) admit to the felony to a representative of the IDES Director 2) Sign a written admission of the felony or theft to be delivered

to the IDES; or 3) Be convicted of, or given an order of supervision by a court,

the felony act or theft

Job Performance Problems as Misconduct

Generally: Incompetence = unemployment If job performance fails to improve after work

performance assistance or training, may change to a situation of misconduct

The greater the potential risk to the employer as the result of poor performance, the more likely an ultimate termination may be found to be misconduct.

And, the employee must be well aware of the potential harm to be caused the employer if poor performance continues.

Voluntary Termination or Resignation

Voluntary Termination will disqualify a former employee from benefit eligibility.

However… exceptions to this rule…

Voluntary Termination - Exceptions

When worker is deemed physically unable to perform work by a licensed and practicing physician

When worker left work for that of another employer and works for at least 2 weeks for the new employer

Where a worker refuses to accept a transfer to other work offered by his employer under terms of a CBA or employer plan when such work would result in the separation of another worker currently performing this work

Where sole reason for leaving work was sexual harassment of the worker

Where work accepted after worker’s separation would be deemed unsuitable for him

Where the worker leaves because he/she is a victim of domestic violence

Expansion of this exception continues to develop…

Factors to Determine “Voluntary”

Employee has chosen to leave the employment for reason not attributable to the employer “Attributable to the employer” does not

require “fault” It requires more of an “absence of fault” on

the part of the employee

Factors to Determine “Voluntary” (Cont.)

Example 1: Employer is reorganizing – results in changes to the

duties and responsibilities of a particular manager. Manager resigns. Resignation attributable to employer?

Yes – changes will most likely be considered substantial changes to the “working agreement” understood and expected by the employee

Must be a substantial and unilateral modification to the employee’s working conditions, duties, responsibilities of reasonable expectations associated with the job position.

Factors to Determine “Voluntary” (Cont.)

Example 2:Employee takes 2 week leave of absence

and asks for extension which is denied. Does her failure to return to work at end of 2 weeks result in voluntary termination?

Yes – Employer is within its rights to deny an extended leave of absence. Employee’s decision to not return to work was a voluntary decision

Voluntary Resignation or Constructive Discharge?

Constructive Discharge = “forced to quit” Employee’s working conditions are so

intolerable that the employee is forced to resign voluntarily

Test: what a reasonable person would do under the circumstances i.e, Were the newly (intentionally) imposed

conditions so difficult or unpleasant that a reasonable person in the employee’s shoes would have felt compelled to resign?

Acceleration of Voluntary Termination Date

Example:Employee provides 2-week notice of her

resignation. Employer tells her to clean out her desk by the end of the day. Is she terminated?

Yes – employee was willing to work 2 more weeks

Constructive Quit

Results from employee’s action that results in his or her inability or unwillingness to continue working, and for a reason not attributable to the employer

Emphasis is often given to the intent of the employee

Refusal of Suitable Work

Where an individual refuses suitable work, they become ineligible for benefits

Refusal of work arises only after a discharge or separation

“Suitable Work”

Means suitable to a person’s job skills or training, along with comparable pay.

Cannot be refused simply because it is not within employee’s “preference.”

An offer of work must be definite and genuine, and the terms or conditions for accepting the employment must be reasonable.

Acceptable Reasons for Rejecting Suitable Work

Significantly lower wages or skillsPhysical obstaclesSafety or potential health hazards; andOther “good cause”

Mechanics of an Individual Claim for UI Benefits

General Process

Initiated by employee as claimantIDES contacts employerEmployer may protest claimIDES calculates benefits, if any

Challenging A Claim

Protest filed by an employer triggers employer’s right to receive an Adjudicator’s Determination as to the claimant’s eligibility for benefits

Where protest is timely filed and includes all necessary information, an employer is entitled to party status in further claim proceedings and has all appeal rights arising from such proceedings and resulting determinations.

IDES can challenge claim Typically arises from finding of ineligibility during

calculation of benefits phase

Appeal of Decision or Determination

General Process

Claims AdjudicatorTo RefereeTo IDES Board of ReviewTo Circuit Court

Most Common Litigation Issues

Not amount of benefits to which a claimant is entitled but whether termination disqualifies an employee from benefits

Ability to make successful protests requires a strong familiarity with all the different grounds for disqualification

Evidentiary Rules before IDES

Formal rules of evidence to not apply to UI claim hearings and proceedings

Matters of witness credibility are typically left to Adjudicator or Referee

Even though certain documents or information might be admitted into record, they may be given little or no “weight.”

Exhausting Administrative Remedies

Illinois Administrative Review Act governs the manner in which a party can seek judicial review

Requires an exhaustion of all administrative remedies or administrative appeal rights

If a party has not sought relief from all appeal rights allowed by the agency, the party is precluded from seeking judicial review

Questions???

SmithAmundsen LLC

Labor & Employment Group

www.salawus.com