How to Fire Someone Without Paying Unemployment

by Elise Stall; Updated September 26, 2017

Running a business while employing a number of workers can be stressful for management, especially when a particular employee is not performing at a satisfactory level. For a small business owner, firing an employee can be disastrous in terms of finances if it is not handled properly. Federal law requires that the employee must be fired by cause in order for the employer to escape paying for unemployment compensation. In other words, a deliberate action or pattern against the best interests of the business must have been exhibited by the employee. In most states, an employee fired without cause is legally entitled to receive unemployment insurance compensation from the employer.

Step 1

Ensure that the employee first has a clear understanding of his responsibilities and boundaries in the business. He should understand his job description, confidentiality information, property and resources, training requirements, health and safety procedures, contact and interaction with clients and any issues related to workplace harassment. The rules must be clear so that you have sufficient proof of violation to avoid paying the employee unemployment insurance.

Step 2

Document all violations of work-related rules and policies as soon as they occur. A verbal warning is usually the first step, followed by a written warning. The written warning should be reviewed with the employee, and a signed copy should be retained by the management or the owner of the business.

Step 3

Monitor the employee through computer monitoring software or cameras. This may help prove your case by determining, for example, whether or not the employee is spending hours send personal emails or visiting websites that are not work-related. You must inform the employee that that she is being monitored before installing the software or cameras. Federal law states that all employees have a right to know they are been monitored in the workplace.

Step 4

Write up a termination letter explaining why the employee is being terminated. Keep it brief, simple, and only refer to past violations that pertain to the business’s policies and rules.

Step 5

Set up the termination meeting. Have a witness assist you with any controversy or to further prove your case later on if the employee files for unemployment. Call the employee in for the termination meeting. Keep the meeting short and to the point, explaining all work-related reasons and violations as the basis of the termination.

Step 6

Wait to see if the ex-employee files for unemployment insurance. Depending on the laws of your state, he has the right to file for unemployment. If you cannot establish a sufficient cause, you may be required to compensate the ex-employee.

Step 7

Respond promptly to any questions or inquiries from the unemployment office. Remain truthful in your explanations, referring to all clearly documented violations and business policies that pertain to the case. With proper documentation to support the cause, your business will not likely be responsible for compensating your ex-employee for unemployment after the termination process.

About the Author

Elise Stall is an experienced writer, blogger and online entrepreneur who has been writing professionally since 2009. She currently blogs at Elise's Review. She has a Bachelor of Commerce from the University of Ontario Institute of Technology and a postgraduate diploma in small-business management from George Brown College.