Self-Help: The Overlooked Unemployment Insurance Remedy

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By Clayton A. Mitchell, Esquire
Associate Member, DLLR Board of Appeals

“The unemployment insurance tax rate is tripling”. “The jobless are exhausting their benefits”. These two recurrent themes dominate this year’s Maryland economic news. While both issues are critically important to their respective constituency, their solutions appear mutually exclusive: extend benefits and raise taxes or cut off benefits and ease taxes. Neither solution is politically palatable.

However, what some employers and claimants fail to realize is that hiding in plain sight is an alternate solution: not to permit the conditions which make taxes rise or benefits stop occur in the first place. While this admittedly simple solution cannot pertain to all situations due to the harsh current economy, there are many instances where it could effectively apply.

In my 16 years as an Associate Member on the Maryland DLLR Board of Appeals (which reviews unemployment insurance tax and benefit cases on appeal), I have reviewed, heard and decided tens of thousands of cases. While each case stands on its own merit, there are a couple of recurring themes have emerged which may shed light on ways to aid both employers and claimants. These common sense solutions cost no money but require a little time and some effort.

After a former employee files for unemployment insurance benefits, the DLLR Unemployment Insurance Agency inquires as to the reasons for the employment separation in order to ascertain whether it was due to a disqualifying event. The Agency’s initial investigation begins with contacting employers by mail. An employer must complete and return an informational form to the Agency providing the reasons for the former employee’s separation. In many instances, the employer does not contest the claimant’s receipt of benefits. For these employers the process ends. However, based on the answers provided, if a claim appears to be contested, the Agency will contact the employer and the claimant by telephone and interview the parties. Based on all the information the Agency receives, it issues a benefit determination.

When employers (who wish to contest a former employees’ receipt of benefits) do not participate in the Agency’s initial fact-finding phase they may incur significant problems with their case. Many employers do not provide even basic information to the Agency at either the initial fact-finding stage or at the interview stage. As a result, in cases in which an employer should otherwise prevail, benefits are awarded to the claimants resulting in preventable increases in unemployment insurance taxes. Depending on an employer’s size, even a single claim can dramatically increase an employer’s unemployment insurance tax rate.

The employer is not left without recourse, however. Any party aggrieved by an Agency decision may appeal to the DLLR Lower Appeals Division for a new (or de novo) hearing. These hearings are administrative contested case proceedings with are quasi-judicial in nature and conducted by a neutral attorney hearing examiner. It may be surprising for the public to hear that the vast majority of unemployment insurance cases are never contested. On average, only 15% of all unemployment insurance claims are appealed. Those employers who do not appeal cannot be heard to complain later about their tax rates.

Even with this “second bite at the apple”, many employers will once again fail to protect their tax rating. Many lose their cases because of a lack of hearing preparation and the absence of eyewitnesses. While hearsay is admissible in an unemployment insurance hearing, it is given much less weight than live first-hand testimony. There are legions of employers who merely send an office assistant or a human resource person to a hearing with absolutely no first-hand knowledge as to the events which led to a claimant’s separation from employment. Because the claimant is present and testifying from first-hand knowledge, the claimant will usually carry the day. Consequently, an employer’s lack of proper case preparation will cause its unemployment insurance tax to increase when benefits are awarded to the claimant.

Preparing for and attending unemployment insurance hearings may seem like a time-intensive endeavor. The truth is that it can be. However, if employers addressed all unemployment insurance claims at the earliest stages of the process, many preventable problems would be avoided. Regretfully, a material number of employers fail to participate in the early administrative stages of a former employee’s claim. The Agency cannot act upon information it does not have.

Many employees lose their jobs due to a sheer lack of discipline. In this “Great Recession”, employees must do anything and everything to preserve their employment to the fullest extent possible. While employees cannot change the economic climate, there are many ways they can prevent losing their jobs due to non-economic reasons.

An old English proverbs states: “The early bird gets the worm”. In my experience, the number one reason why employees are fired from their jobs is related to attendance policy violations. This is, however, the most preventable cause.

Here is a bit of advice that all employees in this State must heed. You must report to work on time, strictly adhere to your work schedule, and have a permitted or documented excuse for each instance you are absent from or late to work. Whenever you are sick, “call off” in accordance with your company’s policy and get a doctor’s note if you are sick. If you are experiencing personal problems for which you need time to address, seek out a leave of absence or get an approved vacation. The number of employees discharged for lateness is comparable to the number of employees discharged for absenteeism. Have a back-up daycare plan if you anticipate your daycare provider will be closed or unavailable. Always arrange your schedule to arrive to work early, to avoid traffic problems, and to resolve last minute problems at home. The advice to employees is the same advice given to employers: an ounce of prevention is worth a pound of cure.

While the above suggestions will not completely prevent unemployment taxes from rising or extend unemployment benefits to deserving claimants, it will resolve economic hardships for at least a few employers and employees in these tough times.
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