Should You Oppose Unemployment for a Departed Employee?

Photo via Pexels

You have let an underperforming or even bad acting employee go. Should you oppose their application for unemployment benefits? Of course, it depends on the individual situation, but there are some common considerations, some of them not always obvious to employers.  

There are two basic parts of the equation. One, will you win? Two, what’s at stake? Your answers to those two questions should drive your decision whether to fight unemployment.

Will you win?

First, the basics. In Ohio, in most situations the test for whether a former employee gets unemployment compensation is whether the employee “has been discharged for just cause in connection with the employee’s work.” That is our focus here. (There are many tricky questions as to how benefits are computed and other things that are beyond our scope here; this publication from the Ohio Department of Job and Family Services (ODJFS) is a good starting point for employers.)

Employers tend to overestimate their likelihood of prevailing on whether an employee was discharged for “just cause,” for two reasons. One, employers usually overestimate their likelihood of prevailing in disputes, because they have not always laid the documentation groundwork for their lawyer or other representative to tell their story to an overworked and underpaid third-party decisionmaker. More on that hereEmotion *may* factor in too.

Two, while it doesn’t say it anywhere, experience tells us that “just cause” in the Ohio unemployment context tends for employers to be a tougher version of the general question “was it OK to fire this person” than in other contexts. Your basis for termination might very well be sufficient to successfully defend a discrimination case, for example, but not enough to successfully fight unemployment benefits. It can be a very tough sell to convince the administrative officials at various levels of the process that the former employee should not get unemployment benefits. In short, if you don’t have smoking gun evidence of serious conduct or performance issues, there is a good chance you will lose.

What’s at stake?

Start with the obvious – what is the dollars and cents difference if you win or lose? This is an ascertainable number – not always easily ascertainable to the penny, but in general. In the scheme of potential employment disputes, usually it is not a particularly high number. If you are going to use a lawyer, certainly factor those fees in – if you go through several levels of appeal, you could spend more on the lawyer than is at stake between you and the employee.  

(Do you need to use a lawyer? No, you don’t have to, and clients handle unemployment matters on their own all the time. But if it’s important enough to you, usually it’s better to loop the lawyer in sooner than later.)

Then consider what is the precedent and impact outside of the straight dollars and cents. In the unemployment setting, the most common manifestation of that is that you anticipate other and likely higher stakes disputes with the same employee. You want to send a message and perhaps do some information gathering. (Note that what you learn in the unemployment proceedings may not be admissible in other cases, but it can be opportunity to learn what the employee’s story will be.) 

I find that, if employers carefully weigh these factors, sometimes fighting unemployment in earnest is not worth it. That is certainly not always the case, but on balance I think employers take on more of these fights than they are reasonably likely to win.

One last important point – if you are entering into a severance agreement with the employee and want to let the employee know you will not fight unemployment, what can you agree to in that regard? Approach this subject carefully, because the state makes the decisions, not you, so you cannot promise a particular outcome. Be careful even agreeing not to oppose unemployment, because the employer technically has obligations to respond to the state. Experienced employment counsel will have language you can use for this situation.

Each situation will be different and, if important to you, warrants speaking with your usual counsel, but this should give you a good framework for considering next steps when you get that notification from ODJFS.

This article should not be construed as legal advice or a legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer on any specific legal questions you may have concerning your situation.

Barnes & Thornburg LLP is a national, Midwestern-based business law firm that strives for a more entrepreneurial and cost-effective approach both to client service and its own business. Read more Metropreneurial Legal Insights.