Employer Responses to Unemployment Benefits Claims Take on Greater Importance

Herring-Wade-OPTBy Wade Herring

For Business in Savannah

Employers should take a closer look at their separation practices following a ruling issued by the Georgia Department of Labor (DOL) in October. The DOL mandated stricter response requirements for employers after former employees file claims for unemployment benefits. The DOL acted in accordance with a provision in the federal Trade Adjustment Assistance Extension Act of 2011 (TAAEA).

The law is intended to encourage employers to respond on time and in full to requests for information after an ex-employee has filed a claim for unemployment benefits. The concern is that unnecessary benefits are paid because employers respond too late or with incomplete information.

Under the new rules, an employer will be charged for all unemployment benefits paid as a consequence of the employer’s failure to provide a timely written response to a claim for unemployment insurance benefits, regardless of whether the determination to pay benefits is later reversed on appeal or if an overpayment is established. More importantly, employers who fail to respond fully and on time to written requests for information on any three unemployment insurance claims in one calendar year will be charged for benefits paid on all claims that follow in that year.

Employers have the right to appeal the determination that they failed to respond properly, but they must be prepared to establish “substantial good cause.” Substantial good cause requires a showing of extenuating circumstances which prevented the timely or adequate filing by the employer, or such extenuating circumstances were beyond the employer’s or the employer’s agent’s control. In other words, substantial good cause will be difficult to establish.

Depending upon the circumstances of an employee’s departure, some employers have intentionally soft-pedaled their responses to claims for unemployment benefits. After all, the employer pays unemployment taxes and unemployment benefits were designed as a safety-net for persons out of work. An ex-employee receiving benefits has some modest income, and therefore, is less angry and less desperate, perhaps less likely to file other, more serious legal claims, such as a charge of discrimination.

The DOL’s new rules change the calculus for how employers can separate employees who are not a good fit, and at the same time soften the landing for the employee who is exiting the organization. When the DOL requests information in response to an unemployment claim, employers should respond fully and on time.