Dealers, like other businesses, have been trimming payrolls to deal with the economic downturn. While employment cuts may be necessary, a dealer must recognize that ex-employees who claim unemployment benefits still pose a cost for the dealership. While dealers do not want to deny unemployment benefits to ex-employees who are entitled to them, it is a different story for ineligible ex-employees. Dealers must be diligent to minimize the costs of unemployment.

Experience Ratings. 

The state determines the amount each employer must pay to its unemployment fund based on an employer’s experience. This “experience rating” is affected by the number of former employees who have collected benefits. As a dealership’s employees collect unemployment, the dealership’s rate may increase.

Keep the Experience Rating Down.   

While reducing turnover is the primary method of keeping the dealership’s experience rating down, that may not be possible when cutting the dealership’s work force. However, that does not mean that a dealership is powerless. Dealers can help themselves by being proactive to ensure that ineligible ex-employees don’t draw benefits.

Prevent Ineligible Ex-Employees from Obtaining Unemployment Benefits.

Keeping ineligible ex-employees from drawing unemployment benefits is hard work. There are a number of things that must be done.

• Keep accurate records of employment, earnings, and reasons for separation.
• If an employee voluntarily resigns, that can be a basis for denying unemployment benefits unless the employee resigned “with good cause”. When an employee voluntarily resigns, interview the employee and have the employee sign a statement that the resignation was voluntary. Have the employee specifically state the reason for leaving your employment. If the employee will not sign a statement, make notes of the employee’s reasons for resigning and keep them in the employee’s file.
• An employee is ineligible for unemployment if terminated with “cause” as defined under the state’s unemployment law. The causes that may justify ineligibility for benefits are generally misconduct (such as insubordination, theft, dishonesty, failing a drug test, and the like) or job performance so poor that it rises to the level of deliberate disregard of the dealership’s standards.  When terminating an employee with cause, note the reasons for termination in the employee’s file.
• Carefully check all charges to the dealership’s unemployment account.
• Carefully check all rate notifications.
• Challenge claims for benefits by ineligible ex-employees.

 

Contest an Unemployment Compensation Claim When Appropriate. 

When you get notice that an ex-employee is seeking unemployment compensation, and you believe the ex-employee should be ineligible, contest the claim. Those who will rule on the challenge are generally disposed to favor the claimant’s right to compensation. However, where you have a solid case for the ex-employee’s ineligibility for unemployment compensation, you should make it. You may be surprised by the result.

• When you get a claim, respond within the time set forth in the notice to file an opposition. Detail the reasons for ineligibility in the opposition.
• Participate in any hearings; they are often held by phone.
• When participating in a hearing, know your facts. This is where good record keeping is critical.
• Don’t be shy about making your case. Detail all the facts to show the ineligibility of the ex-employee.