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I. Basic Qualification Issues
A threshold requirement that every claimant must meet before drawing unemployment benefits is to show that they are out of work through no fault of their own. This fundamental requirement is also known as the "work separation" issue. The qualification issue depends upon why the claimant came to be separated from the last work he or she held prior to filing the initial claim. That last work separation could have been from regular employment, from independent contractor work, or even from casual work for a private individual. What TWC asks is whether it was the claimant's fault that that last work came to an end when it did. As such, the emphasis is always on the cause or incident that precipitated the work separation. In a discharge case, that will be the final incident, the incident but for which the work separation would not have occurred at the time it did. In a voluntary leaving case, the focus will be on the final problem that caused the claimant to decide that leaving would be better than staying.
In work separation determinations, the burden of proof is on the party who initiates the work separation: If the claimant quit, the claimant must prove good cause connected with the work for quitting; if the claimant was fired or laid off, the employer must prove that the work separation resulted from misconduct connected with the work on the claimant's part, if the claimant is to be disqualified from UI benefits.
The primary disqualification categories include:
discharge for misconduct connected with the work
voluntary quit for personal reasons
refusal of suitable work without good cause
work stoppage resulting from participation in a labor dispute
receipt of wages in lieu of notice, workers' compensation, or retirement pension
In situations involving the first three disqualification categories, the disqualification remains in effect until the claimant returns to work for at least six weeks and/or earns at least six times his or her weekly benefit amount. The disqualification for striking workers lasts during the pendency of the labor dispute, but ends if the claimant makes an unconditional offer to return to work and the offer is refused, or if some other event occurs that effectively severs the employment relationship. In the final category, the disqualification for wages in lieu of notice remains in effect during the period covered by such wages. The disqualification for receipt of workers' compensation benefits lasts as long as the claimant is receiving such benefits. Finally, the disqualification for pension benefits applies only to pensions based in part on wages received during the base period, and the disqualification is really a dollar-for-dollar offset of pension or retirement benefits against the unemployment benefits that would normally be due.
II. Focus: Misconduct
This section will show you what you need in order to respond to an unemployment claim involving a claimant who has been discharged for some kind of misconduct. In any such case, you need to show two main things. First, you need to prove that the claimant was fired for a specific act of misconduct connected with the work that happened close in time to the discharge. Second, you must show how the claimant either knew or should have known he could be fired for such a reason. In the vast majority of cases, employers will need to prove these things with documentation and with firsthand testimony from witnesses who have direct, personal knowledge of the events in question. Following these suggestions should give you a much better chance of success in a case. Not following them, either avoidably or unavoidably, will make it much harder to defend against what you might consider an unjustified claim.
The most common mistakes employers make that cause difficulty in unemployment claims based upon a discharge are:
failing to give a final warning prior to discharge;
inconsistent discipline between two similarly-situated employees;
failing to follow the stated disciplinary policy;
telling TWC that the claimant was fired for an "accumulation" of incidents, instead of a specific final incident;
letting too much time pass between the final incident and the discharge;
telling TWC that the claimant was "unable" to satisfy performance standards;
allowing the impression that the discharge was really based upon a personality dispute; and
failing to present firsthand witnesses and proper documentation when needed.
Things An Employer Should Never Say in a Misconduct Case
There are some words and phrases an employer should never use in a claim response, appeal letter, or testimony at a hearing. The problem is that many of the claim examiners, hearing officers, and legal staff at TWC think less of an employer's case when they see or hear the following because such terms sometimes confuse the issues and obscure the true problems the employer is trying to get across. Put another way, certain terms mean one thing to many employers, but quite another thing entirely to agency employees who rule on cases:
Specific problem terminology:
Inability: as in "we fired the claimant for inability to do the job", "the claimant was incompetent", "the claimant never performed the work satisfactorily", "he seemed unable to grasp the job", or "she was unable to follow our rules". Inability by itself is not misconduct. The employer must show that the claimant was failing to do his or her best.
Accumulation: as in "we fired the claimant for an accumulation of things". The "shotgun approach" almost never works. Concentrate on the final incident - that's what TWC and the courts do.
Mutual agreement: as in "she left by mutual agreement". Most TWC employees think "discharge" when they hear that. If the claimant had no choice but to leave when she did, she was discharged, and the company needs to prove misconduct.
Disloyalty: be more specific than that. Stating that someone was fired for "disloyalty", without giving specifics, makes many TWC employees think that the discharge simply resulted from hurt feelings or a personality dispute.
Poor attitude: again, be more specific. It's not misconduct to fail to be happy at work. Show how the claimant was failing to get along with coworkers or customers, how that was affecting her performance and the performance of others, and how her actions were within her power to control.
Avoiding misunderstandings caused by using the wrong terminology is essential. Like it or not, employers have to deal with the fact that claim examiners, hearing officers, and agency legal staff have their own terminology that means very specific things to them. Employers need to watch out for themselves in this area and make sure that they are crystal-clear in explaining how the claimant was at fault in the work separation and how a reasonable employee would have known he or she could be discharged for the reason involved.
Special Note for Staffing Firms
Temporary staffing or staff leasing companies sometimes run into a problem when they terminate an employee completely with no intent of ever reassigning him or her to another client. TWC claim investigators and hearing officers sometimes fail to recognize the true situation and try to apply the provisions in the UI law relating to a claimant's failure to report back to the staffing firm for reassignment. In cases of complete discharge for misconduct by the ex-employee, emphasize to TWC in the initial claim response that the claimant is permanently separated from employment and is ineligible for reassignment to any client in the future. That information will be in addition to complete details concerning the misconduct that led to the termination. Staffing firms should also keep in mind the great importance of firsthand testimony; many times, the case will depend entirely upon firsthand testimony from witnesses from the client company.
TWC's Appeals Policy and Precedent Manual has many precedent cases illustrating the meaning of "misconduct"; employers may download the file at http://www.texasworkforce.org/ui/appl/mc.pdf (PDF).
III. Focus: Voluntary Leaving
This section deals with what you need in order to respond to an unemployment claim involving a claimant who has resigned, i.e., left work voluntarily. In any such case, you need to show three main things. First, you need to show that the claimant left voluntarily while continued work was still available. Second, you should try to show that the claimant left for personal reasons not related to the work, or if the claimant left for work-related reasons, that a reasonable employee would not have quit under such circumstances. Third, if applicable, show that the claimant quit without affording you an opportunity to address whatever problem allegedly led to the resignation. In the vast majority of cases, employers will be able to prove these things with documentation and with firsthand testimony from witnesses who have direct, personal knowledge of the events in question. Although the claimant has the burden of proving "good cause connected with the work" for quitting, in real life employers still have to be ready to rebut whatever justifications the claimant tries to give for leaving when he did. This is especially the case when an employee quits because of a reprimand or some other adverse job action. In such a situation, the employer's evidence will need to be basically the same as if the claimant had been discharged.
TWC defines "good cause" as being "such cause, connected with the work, as would lead a reasonable employee who is otherwise interested in remained employed to nonetheless leave the job." As noted in the preceding paragraph, resignation cases involve a kind of "reasonableness" standard: would a reasonable employee have left for such a reason?
Common pitfalls in unemployment claims involving resignations are:
not inquiring into why an employee wants to quit;
failing to take employee complaints seriously;
failing to take prompt, effective action to address confirmed problems;
allowing coworkers or supervisors to harass employees in any way;
combining one form of substantial adverse job action with another (such as a pay cut coupled with loss of benefits, demotion, unfavorable transfer or change in hours, and so on - all changes are considered together to determine whether a reasonable employee would have quit as a result);
explaining that the resignation was the result of "mutual agreement"; and
explaining the work separation to TWC in such a way that it appears the claimant was actually discharged (as in "the claimant quit after it became clear that she was just not up to the job.").
Things An Employer Should Never Say in a Resignation Case
As with claims and appeals involving a discharged claimant, there are some words and phrases an employer should never use in a claim response, appeal letter, or testimony at a hearing. The problem is that many of the claim examiners, hearing officers, and legal staff at TWC think less of an employer's case when they see or hear the following because such terms sometimes confuse the issues and obscure the true problems the employer is trying to get across. Put another way, certain terms mean one thing to many employers, but quite another thing entirely to agency employees who rule on cases:
"We asked for the claimant's resignation."
"We told the claimant to resign."
"We wanted the claimant to resign."
"We were glad the claimant resigned."
"We were relieved when the claimant resigned."
"The claimant's resignation saved us the trouble of firing her."
"She quit, but I would have fired her a dozen times if I'd had the chance!" (these are all direct quotes from actual cases)
An employer should never say or write those things to TWC unless it wants to risk losing the case and having its tax rate go up for three years. Keep in mind that it is best for the case to be regarded as a resignation situation, since the claimant will then have the burden of proving good cause connected with the work for resigning when he did. If the company uses terminology like that in the sentences shown above, it runs the risk that the claim examiner or hearing officer will think that the claimant was really fired, in which case the burden of proof shifts heavily and inexorably toward the employer, and if it cannot prove misconduct on the claimant's part, the case will be unwinnable.
Specific Problem Terminology Oriented Toward Resignations:
Ironically, a lot of employers make unnecessary trouble for themselves in resignation cases by discussing things normally associated with discharges or terminations for cause. Thus, the problematic terms are basically the same in resignation cases as they are for termination cases, the main difference being that in resignation cases, not only can such terminology knock the case into the misconduct arena where the employer has the burden of proof, but it also tends to make a misconduct argument unwinnable. Here is that list again, this time in the context of statements about resignation:
Inability: as in "we needed the claimant's resignation because of inability to do the job", "the claimant was incompetent", "the claimant never performed the work satisfactorily", "he seemed unable to grasp the job", or "she was unable to follow our rules". First, why would the company be talking about the claimant's abilities if she quit? Poor work performance is really only an issue in discharge cases. Second, if it was really a case of discharge (i.e., the claimant was pressured to quit), remember that inability by itself is not misconduct. An employer has to show that the claimant was failing to do his or her best and was warned that discharge could result.
Accumulation: as in "we wanted the claimant's resignation for an accumulation of things". Again, why would the company be talking about the claimant's conduct or work performance if it were really a resignation situation? Those are really only issues for discharge cases. Second, if it was really a case of discharge (i.e., the claimant was pressured to quit), keep in mind that the "shotgun approach" almost never works. Concentrate on the final incident that caused the company to demand the claimant's resignation - that's what TWC and the courts do.
Mutual agreement: as in "she left by mutual agreement". Most TWC employees think "discharge" when they hear that. If the claimant had no choice but to leave when she did, she was discharged, and the employer will have to prove misconduct.
Disloyalty: be careful about describing an employee who resigned as disloyal, since that is usually a justification given by employers for firing an employee. Further, if the claimant's lack of loyalty was somehow related to the reason she quit, the employer needs to be more specific than that. Stating that someone was "disloyal", without giving specifics, makes many TWC employees think that the discharge simply resulted from hurt feelings or a personality dispute.
Poor attitude: again, an employer needs to be more specific, and to be careful about how it brings up "poor attitude" in a resignation case. Such a problem is often cited by employers in discharge cases. If the company talks about the claimant's poor attitude, it would be best to put it in the context of speculation as to why she was unhappy enough to quit. If TWC ends up thinking it was a discharge case, keep in mind that it is not misconduct to fail to be happy at work. Show how the claimant was failing to get along with coworkers or customers, how that was affecting her performance and the performance of others, and how her actions were within her power to control.
Once again, avoiding misunderstandings caused by using the wrong terminology is essential. Employers must reckon with the reality that claim examiners, hearing officers, and agency legal staff have their own terminology that means very specific things to them. Employers need to watch out for themselves in this area and make sure that they are crystal-clear in explaining how the claimant was at fault in the work separation and how a reasonable employee would not have quit the job for the reason involved.
For some important and illustrative TWC precedent cases in the area of voluntary leaving, see the VL section of TWC's Appeals Policy and Precedent Manual, downloadable at http://www.texasworkforce.org/ui/appl/vl.pdf (PDF).
Do Not Turn a Resignation Into A Discharge!
If someone tells you they are looking for other work, or will be interviewing with other companies, be patient! Unless there is a compelling reason to get rid of the person sooner, simply wait for the employee to resign. Remember, the company still has the right to insist that even a soon-to-be former employee turn in good work performance and to hold such an employee to normal work rules and standards. Just let things take their natural course, and assuming the employee resigns to take another job, your company is about 99% certain of never having to worry about a chargeback from a UI claim filed by the former employee. For two TWC precedent cases that show why patience and forbearance are so important, see Appeals No. 87-7940-10-051187 and 87-13371-10-073187 (section MC 135.00, Appeals Policy and Precedent Manual; downloadable at http://www.texasworkforce.org/ui/appl/mc.pdf (PDF)).
IV. General Terminology to Avoid in Any UI Case
These terms, while they may be applicable in certain situations, tend to make a claim examiner think that a company simply hates the claimant and will do or say anything to get him or her disqualified.
Refrain from using any slurs, profanity, or other derogatory references to a person's skin color, race, religion, gender, family situation, national origin, citizenship status, sexual orientation, disabilities, or health - these terms will buy an employer nothing but grief and must be avoided unless the company enjoys the prospect of losing unemployment cases. Keep things on a business-like and professional level. Let the facts speak for themselves. An employer can refer to the above characteristics of a claimant, but should do so only if such characteristics have something to do with the unemployment claim, and then only in non-inflammatory terms that describe the situation in plain language. There is no need to worry about "political correctness". If in doubt, simply imagine how you would describe the situation to a stranger whom you hold in high regard and who you would like to have a good impression of you after hearing your words. Then, put those terms down in writing.
V. Focus: Refusal of Suitable Work
Section 207.047 of the Act disqualifies a claimant who, while in claim status, has refused a referral to, or an offer of, suitable work without good cause. A referral to suitable work can include the situation that occurs when TWC directs a claimant to return to his or her customary self-employment, if they have had their own business in the past. This proceeds directly from the work search and availability requirements that claimants must satisfy in order to be eligible for continued weekly UI benefits. In a nutshell, in all but the most unusual of cases, a claimant must be available and actively searching for full-time work while collecting UI benefits. Claimants are told that if they receive an offer of suitable work, they must accept it, unless there is some good reason not to do so, or else face disqualification. Such a disqualification is every bit as serious as a disqualification for quitting a job without good cause connected with the work or for being discharged for misconduct connected with the work.
"Suitable work", according to TWC, means work that would be in line with the claimant's prior experience or training. Section 207.008(a) lists several factors to consider:
the degree of risk involved to the individual's health, safety, and morals at the place of performance of the work;
the individual's physical fitness and previous training;
the individual's experience and previous earnings;
the individual's length of unemployment and prospects for securing local work in the individual's customary occupation; and
the distance of the work from the individual's residence.
Section 207.008(b) states that work will not be considered "suitable", and thus no disqualification will be imposed, for refusing to accept new work under the following conditions:
the position offered is vacant directly due to a strike, lockout, or other labor dispute;
the wages, hours, or other conditions of the work offered are substantially less favorable to the individual than those prevailing for similar work in the locality; or
as a condition of being employed, the individual is required to join a company union or to resign from or refrain from joining a bona fide labor organization.
TWC's Unemployment Insurance Manual adds that work will not be considered suitable if it "pays less than the claimant's wage demands which are considered excessive, unless the claimant has been informed that the wage demands are excessive prior to or at the time of the refusal of the referral or work offer."
Before TWC will assess a disqualification, the following criteria must be satisfied (as taken from the UI Manual):
A definite work offer or referral must have been made directly to the claimant, with an explanation covering the nature of the work, the wages, hours of work, job location, and other requirements. See AP&P, SW 170.10.
The work must be suitable per the requirements of Section 207.047 and 207.008 of the Act.
The claimant must have refused the offer or referral or failed to report to the employer when so directed.
The following excerpt from the UI Manual is instructive: unless the above criteria are met, a claimant's reason for refusing, no matter how poor, may not be used as a basis for a disqualification under Section 207.047. An ineligibility ruling is not precluded if the reason for refusing so indicates.
At times, an examiner, after establishing that the preceding three points exist, will be unable to contact the claimant. The claimant's failure to respond should not, by itself, be used as grounds to avoid a disqualification. If the claimant gave the prospective employer or the Placement section a reason for refusing the job or the referral or for failing to report to the employer, a decision should be based on that reason. If the claimant gave no reason, it will be assumed that there was not good cause, and a disqualification would be in order, provided the work meets the suitability requirements.
In some instances, a claimant will refuse a job or a referral solely for personal reasons. While such a reason may constitute good cause, it must be explored in relation to the claimant's availability for work because it may be the basis for an ineligibility ruling.
The fact that an ineligibility ruling is assessed does not necessarily prevent a concurrent disqualification under the provisions of Section 207.047 of the Act. Example: if a claimant is ineligible because of excessive wage demands and refuses an offer of suitable work without good cause, a disqualification is mandatory under the provisions of Section 207.047 if the claimant has been told that the wage demands are excessive. If a claimant refuses an offer of suitable work for some reason which would remove the claimant from the labor market and such reason does not constitute good cause for refusing suitable work, a disqualification under Section 207.047 and an ineligibility under Section 207.021(a)(4) can be initiated on the same date.
If a claimant is ineligible under Section 207.021(a)(3) because of physical inability to work or has good cause for being unavailable for work, a disqualification under Section 207.047 would not be applicable because the claimant would have good cause for refusing the work offer.
The provisions of Section 207.047 may be applied to a claimant at any time suitable work or a referral to suitable work is refused during a benefit year or an extended benefit period subsequent to a benefit year, regardless of who actually makes the offer.
The effective date of a disqualification assessed under Section 207.047 begins with the date of the refusal.
VI. Layoffs, Unpaid Suspensions, and Medical Separations
Layoffs
This category of work separation was the one that lawmakers had in mind when the unemployment insurance system was created. A laid-off employee will qualify for unemployment benefits on the basis of the work separation, but still has to meet other qualification and eligibility requirements in order to draw benefits. Temporary plant shutdowns and unpaid furloughs are generally considered types of layoffs.
Unpaid Suspensions
An unpaid suspension is a form of work separation. Anytime an employee stops performing work for pay, the conditions for filing an unemployment claim exist. Whether the claim will be paid in such a case depends upon whether the unpaid suspension was the claimant's fault. The length of the suspension is important to the determination. In Appeal No. 96-012206-10-102596 (MC 135.45(2), Appeals Policy & Precedent Manual), the Commission ruled that where an unpaid suspension lasts three days or less, and the claimant quit rather than return to work following the end of the suspension, the work separation is considered voluntary on the claimant's part, and the claimant must prove good work-related cause for failing to return to work. Conversely, if a suspension lasts four or more days, a claimant's refusal to return to work will not matter, and the employer will be expected to prove that the suspension occurred as the result of a specific act of misconduct connected with the work and that the claimant either knew or should have known that suspension or discharge could result from such an action.
Caveat: Please be aware that partial-week suspensions without pay in the case of salaried exempt employees may endanger the exempt status of those workers under the Fair Labor Standards Act.
Medical Separations
There are several ways in which the medical condition of the claimant can be an issue in an unemployment claim. For instance, eligibility rules require claimants to be medically able to work in some field for which they are qualified either by training or experience. Thus, claimants who are too incapacitated to work may not draw unemployment benefits. If a claimant's work separation was the result of a medically-verifiable condition on the claimant's part, the claimant may not be disqualified, since the medical condition was presumably beyond the claimant's power to control. If the employer named as the last employing unit on such an initial claim was a base period employer, and if the employer was a private taxed employer, it may be eligible for chargeback protection under such circumstances. In the case of job offers, if a claimant declines an offer of work because such work would be impossible or inadvisable from a medical standpoint, the claimant will not be subject to disqualification for having refused suitable work. Finally, if a claimant was fired for failure to submit medical documentation, an employer may be able to win the unemployment case if the requirement for submission of the documentation was in keeping with a statute or regulation or else arose from a legitimate policy of which the claimant was aware.
Medical chargeback protection is available for private taxed employers under some circumstances. Such protection is easy to obtain if evidence shows that the claimant quit due to a medical condition that no longer allowed him or her to work. It is also easy if the company had to discharge the claimant for documented medical inability to perform the only work available for them. It is a harder case if the employer fired the claimant for frequent absences caused by their personal medical condition or the medical condition of their minor child. Many claim examiners will rule that the claimant is qualified for benefits, but still charge the employer's tax account. One mistake an company should never make in such a case is to start out trying to argue that the medical absences constituted misconduct for which the claimant ought to be disqualified, since that will never work, and the company will run the risk of TWC completely ignoring the possibility of a "pay and protect" ruling. The company's best strategy in a case like this is to start out with a statement to the effect that the company has no problem with the claimant drawing benefits, but feels that its tax account should be protected from chargeback. The employer should point out how long it tried to work around the claimant's frequent medical absences and that eventually, the other employees could no longer cover for him or her. An employer's chances of getting chargeback protection are much better if it can show that it is a small company with not many employees (or that the claimant worked in a small department) and that the employer tried as long as practicable to accommodate the claimant, but that it reached the point where the company had to have an employee with reliable attendance in that job. For ideas on how to word verbal and written warnings to employees regarding medical-related absences, and how to respond to an unemployment claim under such circumstances, see the topic "Medical Absence Warnings" in the "A - Z of Personnel Policies" section of this book.
Of course, medical separations can have legal ramifications far beyond the reach of the unemployment compensation system. Employers with employees who may be protected by the Texas Workers' Compensation Act, the Americans with Disabilities Act, or the Family and Medical Leave Act should consult with private legal counsel before terminating these employees.
VII. Miscellaneous Disqualifications
A. Participation in a Strike
If a claimant is out of work due to a strike or other kind of work stoppage resulting from a labor dispute, he will generally be disqualified until and unless he makes an unconditional offer to return to work that is refused by the employer. Part of the rationale for this disqualification is that with regard to striking workers, the employment relationship has not been severed, and so such employees cannot be regarded as "unemployed".
B. Wages in Lieu of Notice
A claimant who has received wages in lieu of notice is disqualified for the period covered thereby. Wages in lieu of notice is a payment given by an employer to make up for the lack of advance notice of termination and to tide the ex-employee over until she finds new work. The employer has no prior obligation to make such a payment, and it is not based upon any set formula such as length of prior service, but rather upon whatever arbitrary amount the employer deems appropriate at the time it is made. This type of payment must be distinguished from "severance pay", which is not disqualifying. Severance pay is a payment that the employer has previously obligated itself in some way to make and is generally based upon a set formula, such as length of prior service. An employer who gives wages in lieu of notice should call it that and should write that term on the memo line of the check.
C. Workers' Compensation Benefits
A claimant cannot draw workers' compensation and unemployment compensation at the same time, except during the claimant's receipt of impairment income benefits or, in rare cases, for those claimants with permanent, partial disability as the result of a pre-1989 injury. However, if a claimant has such a disability, there could be an issue of whether the claimant is ineligible for benefits based upon medical inability to work, and the employer should not hesitate to raise the issue. Remember, prevention of dual receipt of workers' compensation and unemployment insurance benefits is one of the purposes of the new hire reporting laws (see the discussion in the articles titled "New Hire Reporting Laws" and "How Employers Can Help Reduce Claim Fraud").
D. Pension or Retirement Payment
If the claimant is receiving a pension or retirement payment based in part upon wages earned during the base period of the claim, there is a dollar-for-dollar decrease in the UI benefits that would otherwise be payable.
E. Sale of One's Own Business
A claimant who is out of work due to the sale of her business is normally disqualified from UI benefits, assuming that the claimant was a majority owner and had a voice in the sale. This disqualification is basically the same as the voluntary leaving provision of the law that applies to employees who quit; in this case, the business owner decides to quit the business.
F. Quitting to Go to School
This is really no different than the disqualification for quitting for personal reasons.
G. Refusal to Perform Services for a Patient with a Communicable Disease
This disqualification is simply a variation on the disqualifications for discharge for misconduct and quitting for personal reasons. It applies if the employer made normal safety and health equipment available to the worker who had to work with such patients. The disqualification applies if the claimant was fired for refusing to perform services for a patient with a communicable disease or if the claimant quit rather than perform such services.
VIII. Conclusion
The Texas Unemployment Compensation Act provides several ways for claimants to be partially or wholly disqualified from unemployment benefits. Every employer concerned about its state unemployment tax rate should familiarize itself with the various disqualification provisions and keep in mind that if one reason for disqualification does not apply, another reason or two may well apply, and it would be a good idea to let TWC know about any circumstances that might raise a qualification issue.