Be sure to understand unemployment rules.

Unemployment Woes

I've received a multitude of calls regarding unemployment claims. Today I'm playing "Myth-Buster" to help clarify a few of the incorrect legends that are floating out there.

Myth #1:  "Since I have a 90-day orientation period (aka introductory period, probationary period), if I terminate an employee during this period, the employee isn't eligible for unemployment. And I'm off the hook for that expense."

Answer #1:  Unfortunately, this isn't true. If an employee worked for you for any length of time as a temp, a regular employee or a probationary employee, they are still eligible to file for and receive unemployment. There is no grace period when it comes to unemployment. As long as the employee did not resign or was not terminated for "cause" (and there's a legal definition for cause in each state's statutes), then they can file for and will likely receive unemployment benefits. 

An employee who is terminated for poor performance is typically eligible for unemployment, unless you can show that they deliberately failed to perform tasks they know how to perform and have previously performed -- which is difficult to prove.

The 90-day new hire period is strictly an internal method for reviewing an employee's performance and determining early on in the employment experience whether or not you want to retain that employee and/or what training they need to be fully successful in the job. It does not eliminate the employee's right to collect unemployment.

Myth #2:  "It took me a couple of days to make the decision to terminate the employee for cause. The employee continued working while I was making the decision. I should not have lost my unemployment case."

Answer #2:  One of the things that unemployment judges look for is that the policy violation (the "cause") was serious enough to warrant swift action, such as immediate termination.  The fact that you waited a few days, implies that the employee's infraction wasn't that severe.  Therefore, the judge won't necessarily consider the termination for "just cause." 

If you can't decide what to do regarding terminating an employee, suspend the employee without pay while you investigate, then terminate if appropriate.  The suspension shows the unemployment folks the seriousness of the infraction. 

Of course, with any termination and in order to win any unemployment claim, document, document, document.

Employment Agreements

I've also had several clients present me with signed Employment Agreements between them (the organization) and their employees. There may be key positions in an organization, such as an Executive Director or President level position, where an Employment Agreement is necessary to protect both the individual and the organization.  Other than that, I recommend that you create an Offer Letter describing pay handling and employee benefits. But you should not define a set period of employment for any of your employees, which is typically the purpose of an Employment Agreement. 

One of the most employment important rights we have as employers is the right to enforce Employment At Will. This allows both the employer and the employee the right to terminate the employment relationship at any time, with or without notice, with or without cause, for any or no reason as long as you are not discriminating against a protected class of employees. 

By setting a timeline for an individual's employment, you are negating employment at will.  If you were to be held to this agreement, let's say you terminated the employee after 3 months of employment.  You may be liable for continuing that employee's pay until the end of the agreement, which would be unnecessarily costly to your organization.

A typical offer letter may include the following items:

• Job title, supervisor name/title, hire date, orientation information
• Starting hourly wage for non-exempt employees or per pay period wage for exempt employees, pay period, plus the annualized calculation
• Insured benefits and their effective dates
• Time off benefits highlights
• Confidentiality Agreement, if applicable (you must inform employees about this BEFORE they are extended the job offer)
• I-9 proof of right to work

The offer letter should always include the employer and employee's rights under Employment at Will, even though it has a negative tone when you're excited about welcoming the employee to your organization.

It should never include the line: We are looking forward to working with you for many years to come. Or something like that. That would contradict the employment at will language as well. It would be better to wish them success as the newest member of your team.

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