Common Reasons for Denial of Unemployment Benefits

March 17, 2023 by Vikki Chaffin

Individuals who lose their jobs through no fault of their own are eligible for unemployment insurance benefits. The term “lack of work” is often used to describe the reason for discharge upon which the UI benefits are almost a certainty. Lack of work could signal a discharge; however, it actually refers to any time an employee is not working 40 hours per week. However, there are still situations which justify the denial of unemployment benefits. Employers should have a process to analyze and determine whether an unemployment claim is justified.

Some valid examples include:

  • A company reorganization, reduction in force, or a position made redundant by the shutdown.
  • The contract for a temporary or seasonal position has ended.
  • Due to diminished business needs, the employer reduced the hours of an employee.
  • Due to a natural disaster, a temporary lay-off occurred.

In any of these situations, the individual may be eligible for UI compensation. As an employer, you understand that this is what the UI program is for, and you pay unemployment insurance to federal and state funds as obliged by regulations. Keep reading to learn about situations when a claim is not valid, and how to proceed.

Grounds for Denial of Unemployment Benefits

Among the possible grounds on which to deny unemployment benefits, there are a few that could count as non-qualifiers. In other words, the circumstances and requirements necessary for a former employee to qualify for unemployment benefits have not been met.

This can happen if the length of employment or the so-called base period was too short to meet the requirement set by the state. In most states, employment lasting at least 12 months is required to meet the base period.

This is not everything – there are different ways in which states put forth the requirement of sufficient earnings as eligibility criteria for UI benefits. If the employee did not make sufficient earnings either during the entire base period or in the highest-paid quarter of it – the denial of unemployment benefits would be a certain outcome of a claim they have filed.

Additionally, the ineligibility for UI benefits extends to everyone who is self-employed: a contractor, a freelancer, or anyone for whose services the employer is not required to pay social security taxes.

When Should Employers Decide to Secure Denial of Unemployment Benefits

It is almost certain that the state agency is going to ensure the denial of unemployment benefits in cases when no sufficient length or earnings exist in the employee file. When it comes to determining the cause of separation or establishing other grounds for denial, things may not be that easy. This is where the employer needs to show special adeptness and decide to react to claims filed on grounds they believe are not justified.

Employee Quit Without Good Cause

If the employee quits their job voluntarily, either by signing a resignation letter or simply by abandoning their position, and no good reason is given for such an act, they cannot claim UI benefits. As an employer, you do not have only the incentive, but also the obligation to react and protest a claim filed in a case like this.

Employee Fired for Misconduct

Another reason to be alerted as an employer is when you receive a notice of the UI claim an employee fired for misconduct has filed. Provided you ensured all the necessary steps to implement the best practices in managing the unemployment insurance costs, protesting this type of claim would have a positive outcome for you. This does not mean, however, that it is going to be straightforward, so make sure you can provide sufficient evidence and reliable first-hand witnesses, and prepare thoroughly to leave no room for different interpretations at a UI hearing.

Employee Provided False Information

When filing the UI claim, the employee may provide inaccurate information. It could be misleading, false, or just sloppy and inadequate. In any case, keep an eye on even a small inconsistency that may lead to the denial of unemployment benefits if proven as faulty on their compensation application.

Causes for Denial of Unemployment Benefits After Termination of Employment

What happens after the termination of employment is not usually something an employer could in any way influence. However, the approval or denial of UI benefits may depend on factors such as the attitude of the claimant in between the jobs. They need to prove that they:

  • Are actively seeking work,
  • They are available to work if offered a position
  • They did not refuse a suitable job offer made in this period.

If any of these conditions have not been met, the UI benefits will not be granted. Similarly, even if they are, and the records show that the claimant either refused a suitable job or did not even look for one during the job hiatus, the benefits may, later on, be withdrawn.

UI Claims Entail Significant Costs but Could Bring Tangible Savings

Depending on the approach of the employer, UI claims may pose either a significant threat to the company’s budget or an opportunity to secure savings and rationalize expenditures. When considering a claim and whether or not to contest it, we advise caution and readiness for a course of action that will have the best outcome. Not every claim should be protested, and the costs of UI hearings should also be taken into account.

Still, accepting the UI claims as costs of doing business does not count as the best approach either. Whenever there are grounds to protest the claims, keep in mind your tax experience ratings, and do your due diligence to win the hearing. Successful UI management will help you decide when to proceed and how.

Outsource the UI claims management to reap the benefits of an integrated approach, complete hearings representation, and a sure way to accomplish UI compliance.

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