The Washington Post has a great story today looking at how employers are fighting ex-employees’ unemployment claims in record numbers. Why? To save a few bucks on their unemployment insurance.
More than one in four unemployment-benefits claims were disputed by bosses in 2007, well above the levels of fifteen or twenty years ago. Here’s some background
Under state and federal laws, employees who are fired for misbehavior or quit voluntarily are ineligible for unemployment compensation. When jobless claims are blocked, employers save money because their unemployment insurance rates are based on the amount of the benefits their workers collect.
The Post scores a fantastic anecdote about how Gaylord Hotels, a public hotel chain, was trying to stop an ex-employee’s meager $380-a-week benefits. First the sympathy setup:
“I couldn’t believe it,” said Kenneth M. Brown, who lost his job as a hotel electrician in October…
“A big corporation like that… . It was hard enough to be terminated,” he said. “But for them to try to take away the unemployment benefits — I just thought that was heartless.”
Then the dropkick:
After a Post reporter turned up at the hearing, the hotel’s representative withdrew the appeal and declined to comment. A hotel spokesperson later said the company does not comment on legal matters. Brown will continue to collect benefits, which he, his wife and three young children rely on to make monthly mortgage payments on their Upper Marlboro home.
Boom! SuperPost crusades for justice and scores one for the little guy. Or turns on the lamp and watches the rats scamper. Whatever.
Back to the story: Who knew about this cottage industry that’s sprung up?
The cost of unemployment insurance has created an industry of “third-party agents” — companies that specialize in helping employers deal with the unemployment insurance administration. These firms represent employers in disputes with former employees over jobless benefits.
The Post brings in the expert who has important data:
Wayne Vroman, a researcher at the Urban Institute, has documented the rise of challenges to unemployment claims using the Labor Department data. He found that the proportion of claims challenged on the basis of misconduct has more than doubled, to 16 percent, since the late 1980s. Claims disputed on the grounds that the worker simply quit represent about 10 percent of the otherwise eligible applications.
Even as more employers have alleged employee misconduct, their success rate has stayed relatively stable — they lose on such issues about two-thirds of the time.
And I’m sure those numbers rose last year and will this year, too.
The story ends with examples of some of the claims employers are making to block unemployment benefits:
With employees and employers as adversaries, it’s often difficult to determine the facts of a case, and just as difficult at times to separate misconduct from incompetence, which is not a reason to withhold the benefits.
During a day of hearings this week in Wheaton, human resources personnel sat across tables from former employees, and the discussion often turned to written warnings, company handbooks and who-told-what-to-whom.
A former assistant manager at Ri Ra, an Irish Bar in Bethesda, fended off complaints that, among other things, he’d failed to greet guests at the door and one time poured a beer for himself after hours.
A Verizon technician was charged with, in company terms, “detour and frolic.”
And a former salesman at Ethan Allen complained that there was no way he could have made his $35,000 sales quota — and that’s why he quit.
Just a superb job by the Post here.Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at firstname.lastname@example.org. Follow him on Twitter at @ryanchittum.