Understanding Unemployment

“I have an employee who isn’t doing well but I’m reluctant to fire him because I’d have to pay unemployment. What should I do?”

Your HR Survival Tip

Worrying about whether an employee will collect unemployment is never a good reason to keep a bad employee. That bad employee will bring down morale and productivity in your company.

EDD (CA’s Employment Development Department) keeps track of all your employees and you are legally required to notify EDD each time you hire an employee. Payroll companies will usually do this for you but you want to make sure that’s happening. This is how they know who has been working with you (legally).

Your initial unemployment rate is pre-determined by your industry’s standard for unemployment claims. Whether it goes up or down is based on the quantity and size of claims you have. However, it seems like it’s really hard to lower your rate. The monies paid through your taxes are put into a state pool and they track your company’s share of the pool.

When an employee files a claim, EDD looks back at the employee’s earnings over the last 4 or 5 full quarters to determine the amount of weekly unemployment this employee can earn. If you were not the only employer in those quarters, the amount pulled from your pool would be a percentage. For example, if you were the employer for only one of the four quarters, your pool would pay just 25% of the unemployment paid to the employee.

If an employee asks EDD how to re-open a claim, the employee is told they need only work one day to be eligible. There is no minimum time an employee needs to be working for you to be eligible for unemployment. One day of work can qualify them for unemployment.

California wants to provide unemployment to individuals so they make it pretty easy for ex-employees to file. Lately, it seems the only reasons an employee may not receive unemployment is when they resign or for insubordination (e.g., rude/yelling at a supervisor in front of others… but it’s not insubordination if the employee and supervisor are alone).

When you receive a claim, only respond to the notice if you feel you have a good reason to fight the claim and want the opportunity for a hearing to give your reason. Otherwise, just file the form upon receipt… it does tell you this if you read the form carefully If you are fighting it, act fast. There is a very short deadline and EDD may not accept a late request for a hearing.

If you attend a hearing, bring copies of anything pertinent you’d like to give the judge and add to the file. Also, arrive early and ask to see the file. This will give you the opportunity to see what the employee told EDD. When you are in front of the judge, do not speak until asked a question by the judge or the judge has told you to speak. You will get shut down quickly if you try to respond to anything the employee is saying before the judge gives you permission to talk.

Instead of worrying about unemployment, you might give some thought to the training and supervision given your employee… are you allowing them to go bad? Time spent working with employees to ensure their success may result in fewer unemployment claims.

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