On Thursday October 15, Yankee Institute held an online forum with four renowned economists who discussed the current and future state of both Connecticut’s economy and the national economy in the wake of the COVID-19 pandemic and the economic downturn. Below is a series of slides created by Chief Economist ...
Connecticut employers often give up on unemployment appeals
Connecticut businesses drop unemployment appeals or fail to show up for hearings 40 percent of the time, according to state figures, driving the low success rate for employer appeals found in a recent association report.
Strategic Services on Unemployment & Workers’ Compensation, a nationwide association of employers, recently reported that Connecticut employers have one of the lowest success rates in the country. Data provided by Chief Appeals Officer Ralph Dorsey shows that employers frequently decide not to follow through on their appeals, contributing to their low success rate.
Unemployment insurance helps people laid off to make ends meet until they find their next job, but it doesn’t come without cost. Employers pay back the cost of unemployment claims, usually over a number of years. Inappropriate claims add to the cost of repayment, which makes some employers hesitant to hire in Connecticut.
According to the association report, employers were only successful in their first-level appeals 23.8 percent of the time. This figure is in stark contrast to the Connecticut Department of Labor’s claim that employers enjoy a 40 percent success rate. However the report only presents part of the story.
In an email, Dorsey said employers failed to show up for or withdrew 3,328 of the 8,422 claims during 2015. “Thus, when an employer participated in the hearing the success rate was approximately 40% (2,042 favorable decisions out of 5,094 hearings that went forward) as cited on the CTDOL website,” Dorsey said.
In 2015 there were 204,683 unemployment insurance claims, according to the Department of Labor. Of those claims, about 100,000 were “adjudicated,” which is required for “any claim if the separation was for something other than lack of work,” according to DOL spokeswoman Nancy Steffens. Of, those claims, 50,778 were due to the employee quitting or being fired from their job.
This means that employers only follow through with an appeal 5 percent of the time and are successful in their appeal in only 2 percent of all adjudicated claims.
Richard Seigel, president of the Unemployment Tax Management Corporation which specializes in handling unemployment claims and appeals, said employers in Connecticut may just be giving up because they believe the system works against them. “We have heard from many (unrepresented) employers the general opinion that the UI system is biased against employers.”
“There is a bias toward the claimant by state agencies,” Siegel says, “because the unemployment laws are liberally interpreted to aid and benefit to the unemployed worker and his or her family. When you have word against word, the tie goes to the claimant.”
A 2016 survey by the Connecticut Business Industry Association found that 92 percent of small businesses did not believe Connecticut’s policies help them. Respondents frequently said the unemployment insurance system “unfairly punishes businesses.”
Siegel believes that part of the problem rests with employers not understanding the requirements, regulations and “what to prove and how to prove it” in an appeal. He also says that fighting an unemployment claim begins before the termination of the employee through issuing proper warning and taking the correct steps before deciding to terminate employment.
If those proper channels and preparations are not made, the employer could end up paying a higher unemployment tax and losing an appeal.
Failing to follow through with an appeal can be costly for an employer when they have a good case. The average employer will have to pay “dollar-for-dollar” the entire unemployment claim in additional taxes over a three year period, according to Siegel.
The maximum unemployment payment can be $15,548 per year or $598 per week for 26 weeks, so unemployment claims can become quite costly.
An employer is notified when a former employee is approved for unemployment compensation but they are able to file an appeal to dispute the payments. Unemployment appeals are separated into three tiers, the first being an appearance by the employer before a referee.
It is at this first level of the appeals process where 76.2 percent of employers in Connecticut lose their case, 40 percent from withdrawing or failing to appear and the rest by the referee’s decision.
The employer has the option to pursue the appeal to the next level – the Board of Review – but will sacrifice more of their time in the process. If the employer is not successful in their appeal to the board, the final appeal can be made in court.
Federal standards for what constitutes an approved cause for “employment separation” are open to interpretation. Under federal guidelines an employee can quit due to issues with management, loss of a vehicle, or the need to care for a child or parent with an illness.
“Unemployment was developed to help people who lost their jobs through no fault of their own,” notes Siegel. “That’s pretty black and white. But there is a gray area and that is when someone quits their job.”
If an employer changes the terms of employment, changes the skill level of the job or asks an employee to act against their beliefs or safety, then a case can be made that the employee had to separate from employment through no fault of their own.
If an employee is fired, the employer must show good cause, such as “deliberate misconduct,” “knowing violation of a reasonable and uniformly-enforced rule or policy,” larceny or felonious conduct, according to the DOL.
Poor job performance is not considered deliberate misconduct; therefore an employee fired for this reason could collect unemployment insurance.
Not showing up to work is not necessarily grounds for an employer to win their appeal, either, and doesn’t necessarily constitute quitting. According to the federal guidelines an employee must be absent without cause or notification in three separate instances over the course of a year to be disqualified from collecting unemployment insurance. However, strangely enough, missing two days of work in a row is only considered one “instance.”
“A voluntary quit will only be found where an individual specifically and intentionally terminates his or her employment,” according to CBIA. “Merely failing to report to work without notice to the employer is not considered a sufficient indication of a worker’s intent to leave a job, i.e., a voluntary quit.”
In 2015 there were 204,683 unemployment insurance claims, according to DOL, which paid out a total of $617.9 million. Employer’s paid $766.3 million into the unemployment insurance program during same year.
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