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Offices of Phillip J. Griego & Associates Law
Offices of Phillip J. Griego & Associates The purpose of the unemployment insurance program is to provide
benefits to persons unemployed through no fault of their own. Unemployment
Insurance Code §100. Unemployment insurance pays a maximum of $360.00 per
week for 26 weeks, depending on the employee’s earnings. (A copy of the
schedule of benefit amounts is included in the appendix, form DE 11001BT2.)
The funds for UI benefits come from taxes employers pay. Employers have a further
incentive to limit the number of former employees collecting UI benefits because
their tax rate increases when too many former employees collect UI benefits.
UI benefits are administered through the Employment Development
Department (EDD). Employees must file for UI benefits by contacting the EDD
after being terminated or quitting. After the employee states the reason for
leaving his or her last place of employment, the EDD sends a form to the employer
asking for their version. After receiving both sides of the story in writing,
an EDD representative contacts both parties separately and conducts a phone
interview. Based on the information gathered, the EDD makes a determination
as to the employee’s eligibility for UI benefits.
If either party is dissatisfied with the EDD’s determination,
they can appeal the decision to the Unemployment Insurance Appeals Board (UIAB).
The appeal must be filed with the UIAB within 20 days from the date of the EDD’s
decision. (A sample appeal form DE1000M is included in the appendix). An administrative
law judge employed by the UIAB conducts a hearing with both parties present
and makes its’ own decision. The UIAB is not part of the EDD and its’
decision is not based on the EDD’s determination.
After the UIAB issues its’ decision, the losing party can
appeal the decision to the California Unemployment Insurance Appeals Board.
This appeal must be filed within 20 days of the UIAB’s decision. The Board
usually does not accept any evidence that was not presented at the UIAB hearing.
The Board reviews and audio tape of the UIAB hearing and any evidence presented
at the hearing. The parties are allowed to submit written arguments. While most
UIAB decisions are affirmed by the Board, the Board makes its’ own independent
review of the record and will overturn the UIAB when there is an error.
While dissatisfied claimants or employers can appeal the Board’s
decision through a writ of mandate to the California Superior Court, very few
Board decisions are successfully appealed that far.
The essential question in most UIAB claims is whether the employee
was terminated for some reason other than misconduct or quit with good cause.
"An individual is disqualified for unemployment compensation benefits if
the director finds that he or she left his or her most recent work voluntarily
without good cause or that he or she has been discharged for misconduct connected
with his or her most recent work."
The first issue is whether the employee or the employer is the
moving party. If the employee is the moving party, he or she must have
quit for good cause. If the employer is the moving party, the employee must
have been terminated for good cause. Determining who is the moving party is
not always easy. For example, what happens when an employee gives two weeks
notice and the employer tells the employee not to bother coming back? Or, the
employer tells the employee she is going to be laid off next week so the employee
quits?
The answer to both questions is easier if you understand how the
EDD views these issues. If work is available but the employee does not accept
it, the employee is the moving party. If the employee is available for work
but the employer does not have work for the employee, the employer is moving
party. Based on this view, quitting to avoid being terminated makes employee
the moving party. Similarly, terminating an employee before the effective date
of a resignation makes the employer the moving party. There is a small exception,
if the employer pays the employee through the end of the resignation period,
the employee is considered the moving party because effectively the employee
is still employed but just does not have to show up to work.
If the employer is the moving party, the employee will receive
UI benefits unless the employer establishes that the employee was terminated
for misconduct.
Misconduct as a basis for termination of an employee is different than misconduct
as a basis for denying that employee unemployment insurance. Most employees
in California are "at-will" and can be terminated for any reason,
or no reason, so long as the reason is not based on an unlawful motive (i.e.
discrimination, because the employee refuses to violate the law or makes a complaint
protected by law). If an employee is terminated for some reason other than misconduct,
however, the employee will be entitled to UI benefits.
The presumption is that an employee is terminated for reasons
other than misconduct. To establish misconduct, the employer must prove:
(1) The employee owed a material duty to the employer under the contract of employment;
(2) There was a substantial breach of that duty;
(3) The breach is a willful or wanton disregard of that duty;
(4) The breach disregards the employer’s interest and injures or tends to injure the employer’s interest.
The standard is high and the employer has the burden of proof.
Essentially, the employer must show a willful, wanton disregard for employer’s
interest. Inability to perform a job well is not misconduct even if the employer
previously warned the employee. The following are examples of misconduct:
Employees are not entitled to COBRA if they were terminated for
misconduct. Therefore, some employees defeat a misconduct claim by merely showing
they received COBRA benefits and the employer does not offer COBRA to employees
terminated for misconduct.
Just as an employer can terminate an employee for no reason, an
employee can quit for any reason. The employee does not have to give advance
notice, unless contractually obligated to do so. If the employee quits without
good cause, however, the employee will not receive UI benefits.
Additionally, the employee has a duty to try and preserve the
employment relationship. An employee satisfies this duty by taking reasonable
steps to try and remain employed, such as:
(1) Trying to resolve the problem by allowing the employer an opportunity to correct the situation;
(2) Asking for a leave of absence or transfer to other employment if the leave of absence or transfer would remedy the problem and the employee, knew or should have known, that the leave or transfer probably would have been granted; or
(3) Taking steps within his or her own control, such as hiring a care-giver to solve child care problems, or taking public transportation or joining a car pool to solve a transportation problem.
To establish good cause, the employee must show:
(1) A real, substantial and compelling reason;
(2) Which would cause a reasonable person genuinely desiring employment to join the ranks of the unemployed.
Good cause exists for leaving work when circumstances exist such
that a reasonable person having a genuine desire to retain employment would
leave. Generally good cause for leaving work is decided on the facts at the
time the claimant left work. Examples of good cause reasons for quitting include:
If the employee qualifies for UI benefits because of his or her termination,
he or she must still be able, available, and actively searching for work. If
an employee is collecting State Disability Insurance benefits, the employee
is not able to work because an employee can only collect SDI benefits if the
employee cannot work. Similarly, if an employee leaves work to go to school
or care for a family member and cannot work due to his or her schedule, he or
she is not available for work.
Every two weeks the employee collecting UI benefits must affirm he or she is
able and available for work. The employee must also list the employers he or
she contacted in search of employment. If an employee does not show he is able,
available and actively looking for work, the employee will not receive benefits
for that week. If an employee lies about his or her employment search attempts,
the employee can be prosecuted for fraud, pay a penalty, and have to return
the benefits fraudulently obtained.
Before deciding to fight an adverse UI claim, employers should think about
the possible ramifications. The only drawback of employees obtaining UI insurance
is an increased cost to employer. If the employer’s UI fund is not in danger
of being overtaxed, it may not make sense to fight a UI claim. Employees don’t
like losing their jobs. They like it even less when they cannot even receive
UI benefits.
The major drawback to fighting UI claim is that it may provide evidence that
will harm employer. The forms submitted to the EDD, as well as the notes from
the EDD’s conversation with the employer, can be obtained by the employee.
The UIAB hearing is taped and under oath. This means a record is created regarding
the reasons for an employee’s termination. Additionally, the employee can
subpoena witnesses and documents to the hearing.
While the actual EDD or UIAB decision cannot be used as a final determination
of an issue, the testimony or evidence developed in a UI claim can help an employee
in a subsequent wrongful termination or discrimination suit. For example, if
an employee tells the EDD and the UIAB that the employee was terminated because
of repeated absences, the employer may have a difficult time convincing a judge
or jury later on that the employee was also terminated due to unsatisfactory
performance. The UIAB oftentimes gives employees a "free bite of the apple"
by allowing an employee to obtain testimony under oath.
For these reasons, employers should not automatically fight every claim. Think
about whether fighting the claim will result in liability down the road. It
would not hurt to contact your company’s counsel to gain another perspective
on the matter.
Whether you or the employee is appealing an adverse EDD decision, there are
a number of things either party can do to make sure the UIAB hearing proceeds
smoothly. For employers, many of the techniques for defeating an employee’s
UI claim are utilized well before the employee is even terminated.
(1) Document, document, document. Evidence of misconduct is best when it occurs. Documenting an employee’s misconduct at the time it occurs enables the employer to present that evidence at the UI hearing. It also enables an HR manager to adequately respond to a UI claim because the employee’s personnel file contains a history of the employee’s performance. Keep in mind that if an employer fails to notify the employee of misconduct, the employer may condone the conduct. Even verbal warnings can be documented with an email or memorandum to the employee confirming the verbal warning.
(2) Know your facts before responding to EDD. Oftentimes the person responding to the EDD is not the person who made the decision to terminate the employee. The only way a person can adequately respond to a UI claim is to talk with supervisors, coworker, witnesses, etc. to determine exactly what occurred.
(3) Know whether the employee is entitled to benefits before you respond to the EDD. If it looks like the employee is going to receive UI benefits, it may make more sense to just tell the EDD the employer is not contesting the UI claim.
(4) Have appropriate person attend the hearing. If you decide to appeal an EDD decision, or attend the hearing when the employee appeals an EDD decision, make sure the people that attend the hearing can testify regarding the reasons for the employee’s termination. Oftentimes an employer sends the HR representative who never met the employee, did not oversee the employee, and only knows the employee through a personnel file. The HR representative is not always the best person to attend the hearing.Why not send the supervisor and/or co-workers?
(5) Review the file before the actual UIAB hearing. Show up to the hearing about 15 minutes in advance and look at the EDD file. The file will include the employee’s claim forms, the employer’s response, and the EDD’s notes from the telephone conversations with the employee and the employer. These documents can be useful in determining what the other side is going to say. Sometimes you can even review the file a couple of days in advance so you have time to gather the evidence you will want to present at the hearing.
(6) Bring copies of the necessary documents. If you are going to bring written documents, make three copies for the hearing: one for you, one for the other side and one for the record. It does not do any good to document misconduct and then fail to bring the evidence of the misconduct to the hearing.
(7) Respond to the questions asked. The administrative law judge conducting the UIAB hearing asks specific questions about specific issues. The focus of the hearing will be on the reason for leaving work. If the employee was terminated because he stole money, the judge will not care that the employee was late two times three years earlier unless that factored into the employer’s decision to terminate the employee.
(8) Have summary of facts/arguments prepared. At the end of the UIAB hearing, you will have the opportunity to provide a summary of your position. There is no reason why can’t prepare that summary ahead of time. Additionally, if you write down the key facts you want to present at the hearing, you can be sure to get those facts out at the hearing. Remember, if the information does not come out at the hearing, you will likely be precluded from presenting those facts if the matter is appealed to the CUIAB.
(9) Know the basic facts about the employee. The administrative law judge will start by gathering basic information about the employee: dates of employment, pay rate, job duties, last day worked, whether the employee quit or was discharged. Knowing this information in advance will speed up the hearing process.
This information has been prepared by the Law Offices of Phillip J. Griego & Associates for informational purposes only and is not legal advice. Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship. Readers should not act upon this information without seeking professional counsel. The information contained herein is provided only as general information which may or may not reflect the most current legal developments. This information is not provided in the course of an attorney-client relationship and is not intended to constitute legal advice or to substitute for obtaining legal advice from an attorney licensed to practice law. This information is not intended to be advertising and the Law Offices of Phillip J. Griego & Associates does not wish to represent anyone desiring representation based upon viewing this article in a state where dissemination of this information fails to comply with all laws and ethical rules of that state.