Unemployment taxes are a cost of doing business. Funds needed to pay unemployment benefits are provided by employers through federal and state payroll taxes or by qualified nonprofit or government employers who are required to reimburse the state for benefits paid. The amount of tax an employer pays depends, in part, on claims filed by employees. An employer may choose to appeal the unemployment claim of an employee in an attempt to minimize liability.
In the case of private for-profit employers, unemployment tax rates are affected by the employer's experience history. When an employee files an unemployment claim, the employer is notified of the action. The employer may challenge the claim by arguing that the claimant should be disqualified on the grounds that the claimant did not work enough weeks to qualify for benefits, that the claimant was fired for cause or that the claimant resigned rather than being laid off.
Nonprofit employers have the option of becoming cost-reimbursement employers. Cost-reimbursement employers are exempt from federal unemployment taxes but must reimburse state funds, dollar for dollar, for unemployment benefits paid to their employees.
Possible Grounds for an Appeal
While there may be some variation from state to state regarding appeals, in general, employers may be relieved of chargebacks associated with a claim if the claimant left the job without good cause connected with the work; the claimant was discharged for work related misconduct; separation was caused by a medically verified illness of the claimant or the claimant's minor child; the claimant left a part-time job to accept employment that it was reasonably believed would provide an increased wage; the separation was caused by a natural disaster; the employer was called to active military duty; the claimant left work due to a documented domestic violence situation; the claimant cannot physically perform the job and is receiving disability benefits.
Appealing a Claim
Employers should consider carefully whether to appeal an unemployment claim. If a claim is appealed, the state Department of Labor considers the reasons and circumstances surrounding an employee's separation and makes a determination. There are three types of separations. If the employee is laid off, there are no grounds for appealing the claim. If the employee is discharged consideration will be given to the circumstances surrounding the discharge. If the employee voluntarily quits without cause related to the work, the employer may be relieved of liability related to the claim.
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