Unemployment - How It Works

A topic that hits a sore spot for most HR professionals is the topic of "Unemployment Benefits."  For many of us, it's also a mystery how unemployment benefits are actually awarded to the recipients.  So, I thought I'd take you through a crash-course on how the State of Indiana determines "unemployment benefits."

Let's start by taking a scenario:  

Jake is an employee with a small assembly plant.  He earns a base hourly rate of $10.00/hr x 40 hours a week ($400.00/week).  He's been employed for 2 years, but he's been a bit of a bad boy and has had some attendance issues.  Jake experiences a separation of employment for excessive absenteeism. 

Evaluating Criteria

The State of Indiana Department of Workforce Development considers the following when evaluating eligibility:

1.  How much has he earned in the base period (last 4 calendar quarters)?

• In Jake's case, the DWD (Department of Workforce Development) would first look at his average earnings across the base period to determine if he made enough money to first be eligible.  He  must also have base period wages totaling at least $2,750, with $1,650 of those wages earned in the last six (6) months of the base period.  In this case, he should have met the requirements.

2.  Is he unemployed "through no fault of his own?"

• In Jake's case, could the employer provide proof that he was discharged due to excessive absenteeism?  Could the employer show the handbook with the attendance policy?  Could the employer show all the documented attendance counselings that inevitably lead to his discharge?  Sadly, if the answers to the questions above is no, then he will likely receive eligibility for unemployment benefits.

3.  Is he "able, available and actively seeking" full-time work?

• In Jake's case, he will need to log and provide a list of companies where he had applied for and submitted resumes to in order to show actively seeking work.  However, if he refuses work, then he runs the risk of losing is eligibility for his unemployment benefits. 

How Can An Applicant Be Denied Unemployment Benefits?

Again, the burden of proof will fall upon the employer to show evidence of the following circumstances, however, an applicant would likely be declined unemployment benefits if he/she:

1. Quits/resigns employment without "just cause."
2. Gives false information on a job application,
3. Knowingly breaks an employer's rules,
4. Experiences excessive unexcused absences or tardiness,
5. Purposely damages the employer's property,
6. Refuses to obey employer instructions,
7. Reports to work under the influence of drugs and/or alcohol,
8. Consumes drugs and/or alcohol on the job,
9. Exhibits conduct that threatens the safety of others,
10. Is convicted and imprisoned for a serious crime, and
11. Exhibits a breach of a duty applicant owed his/her employer.

In addition, employers who fail to offer a timely response to inquiries verifying information provided to the Department of Workforce Development will experience losing a denial claim.  You have to quickly respond within the timeframe given or you will lose.

How It's Paid to Recipients

Employers pay a standard amount toward a "pool" each payroll period.  The amount "taxed" for unemployment is primarily driven initially based on their payroll amount.  If a separated employee were to receive unemployment, they will be paid out of the "pool" already provided. 

The following year, the unemployment deduction (rate) is re-assessed based on the number of claims from the previous year.  The deduction rate should (in theory) go down if the employer has very low turnover and few unemployment claims.  Likewise, the deduction will go up if the employer experiences a large number of unemployment claims.

Summary:  Unemployment is determined based on meeting certain criteria upon termination of employment.  Unfortunately, the burden falls primarily upon the former employer to provide evidence of the circumstances listed above.  Without written policies, documented counselings and consistent application to policies, the employer stands little chance of defending itself against claims of unemployment. 

Kathleen Lapekas - PHR

Action HR Consulting

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