The cost of unemployment is on the rise. The Department of Labor states that on average, employers have seen their unemployment taxes rise by more than a third since 2009. While the method for calculating unemployment rates varies by state, there is one factor in common—the more claims you have, the more you’re likely to pay.
Because unemployment insurance is experience based—it’s determined by the number of claims the employer has, rather than the actual cost of each claim—every approved application could potentially tip your organization into a new rate category. With the rising costs of claims, it may be worth your while to object to a case that you might have previously allowed to pass by. And if you don’t already have a mechanism in place to review and respond to claims, you may be allowing staff that aren’t really entitled to the funds to collect money from the company.
Who Can Collect Unemployment Benefits?
The specifics of unemployment benefits vary by state, so employers should carefully review state guidelines and eligibility criteria. However, there are some similarities between the states. For example, a laid off worker is almost always entitled to unemployment insurance, whereas an employee who was fired for egregious misconduct probably isn’t.
The definition of misconduct isn’t left up to the employer—each state assesses the particular conduct or reasons involved for the termination, and decides whether it meets the criteria.
It’s important to note that just because an employer has a legitimate, non-discriminatory, valid reason for firing an employee—multiple unacceptable errors, for example—it may not meet the test to disqualify the worker from unemployment insurance.
What is “Misconduct”?
Poor performance, or failing to fit in to company culture isn’t misconduct. Employees who didn’t work out for these reasons will be allowed to collect unemployment insurance in almost all states. And in most cases, unintentional errors, petty arguments and off duty incidents that were not connected to the job are unlikely to rise to the level of disqualifying misconduct, even though your company may consider them misconduct for disciplinary purposes.
Instead, disqualifying misconduct typically refers to intentional incidents by the employee, which have a significant adverse effect on the business. Theft, fraud, harassment and workplace violence are all likely to be considered misconduct. Unemployment appeal decisions are generally available to review, so you can assess the decisions in your particular state if you aren’t certain whether an incident is likely to be considered misconduct or not.
My Employee Resigned, So Unemployment Isn’t An Issue…Right?
Not necessarily. If the employee claims they resigned due to intolerable working conditions—in other words, a constructive discharge—or if the company specifically instructed the worker to resign, unemployment benefits are payable in most states. In some states, unavoidable spousal relocation, or a family crisis might also be reasons for resignation that still allow the former employee to claim unemployment.
Simple Misconduct and Gross Misconduct…What’s the Difference?
Several states distinguish between “simple misconduct”—basic errors in judgment, for example, such as tardiness or low-level insubordination—and “gross misconduct,” which typically involves extreme dishonesty or negligence, theft, or vandalism of company property to name a few examples.
In most states, gross misconduct will completely disqualify the applicant from unemployment benefits. Many states have qualification requirements specifying that the worker must get another job, and contribute a set amount or make payments over a certain period of time to become qualifying again. Simple misconduct doesn’t always disqualify the worker completely in the same way. The state might suspend the entitlement for a certain number of weeks, for example.
What Should Employers Do?
- Review all claims. If you haven’t been reviewing your unemployment claims, now is the time to start. Don’t assume that the reason the applicant gave you for their resignation is the reason they put on the claim form. Likewise, a fired applicant may not confess the nature of the misconduct, minimizing the incident in an attempt to gain benefits.
- Object immediately. If you dispute the claim, object before the initial determination is made. Provide sufficient detail in your objection so that a quality decision can be made.
- Take it to a hearing. Either party has the ability to file an appeal and compel an unemployment insurance hearing if they disagree with the initial determination. The hearing is usually conducted in front of a specialized administrative law judge. You can bring an attorney—and so can the employee—but it’s not required. The hearing is more likely to be in a small conference room than a courtroom, and the standards for evidence and exhibits are similarly informal.
- Document, document, document. It’s all well and good appearing at the appeals hearing, but if you haven’t documented the issues, the misconduct could be difficult to prove. And if you have documented appropriately, make sure to maintain files on departing employees long enough that the paperwork is available at the hearing.
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The Mental Health Parity Act, also known as the MHPA has been extended through December 2007. This is under a law signed by the president. The law was first signed into law in 1996, with a “sunset clause” contained within it. But after 5 amendments, the date of expiry has been extended.
This has a positive effect on Pennsylvania employee benefit plans. It also has a far-reaching positive effect on the other 150 million plus workers throughout the United States who are covered by group health insurance plans.
Prior to the Mental Health Parity Act, employees could find that when they needed to obtain funds for the treatment of mental illness, the funds available were considerably less than those available for other medical conditions.
Sometimes the difference was very great. In some cases the funds for more general medical conditions was as much as $100,000 or more. But the funds available for mental health conditions in some cases fell between $5,000 and $10,000, or even less.
The Mental Health Parity Act now makes this discrepancy illegal. Any group health insurance plan offered to a worker has to allow the same funds for both mental illness and other medical conditions.
The employee has considerable freedom in what these funds can be used for. For example, they may need to visit a psychiatrist, psychologist or a different type of licensed therapist. Under the Mental Health Parity Act, funds will now be available through their public health insurance plan to cover this.
The public health insurance plan will also cover a stay in hospital for a mentally related illness. This might include post-traumatic stress disorder, depression or schizophrenia, as well as many other mental illnesses.
The funds can also be used for rehab for drug or alcohol related dependency.
The Mental Health Parity Act now means that mental illness is treated the same as surgery and other medical treatments within public health insurance plans.
Many people have questions on health insurance coverage for therapy and other mental health treatments. A bill putting mental health insurance coverage on a par with surgery and other medical procedures has just been extended to the end of 2007.
The ruling by an agency that monitors compliance with health insurance and pension laws applies to 150 million workers nationwide, and has a dramatic influence on Pennsylvania employee benefit plans.
This new ruling has a deep impact on Pennsylvania employee benefit plans. Nationwide, in excess of 150 million workers are affected.
The regulation is called the Mental Health Parity Act, or MHPA, and is now extended until December 21 of 2007. The ruling comes down from the EBSA, or the U.S. Employee Benefits Security Administration. The EBSA is the watchdog agency requiring adherence to the regulations on health insurance.
Group health plans are not allowed to put lower limits on mental health coverage than they do for medical procedures, including surgery. Before passage of the original law, your company’s coverage plan could legally have a $250,000 limit on medical care benefits but a $15,000 limit on mental health treatments. Now the two must be equal – plans with the $250,000 medical limit must have the same $250,000 benefit limit on health care. Annual caps on benefits are covered also, with mental health coverage equal to the lifetime or annual ceiling on medical or surgical procedures.
Typical mental health treatments would be stays in mental hospitals or mental health sections of medical hospitals for illnesses ranging from depression to schizophrenia or post-traumatic stress disorder. Visits to psychiatrists, licensed therapists, or psychologists are also covered.
The ruling continues a process begun after the law was originally passed. At that time there was a “sunset clause” which essentially ended the bill on September 31 of 2001. The law was amended five times after that to lengthen the expiration date.
Under current federal regulations, a health insurance plan that covers up to $150,000 per year for surgery cannot pay just $1,500 for mental health treatment. That has been illegal since 1996. Prior to that year, it was a normal practice in many healthcare plans was to pay a lower amount for mental treatment.
In 1996, Mental Health Parity Act, or MHPA, was approved, to regulate this matter. This bill requires that any plan that includes mental health in the coverage must pay the same amount for this concept as for other types of treatment, including surgical procedures.
The MHPA bill was originally intended to be valid until September 30, 2001, but it has been extended several times. The most recent extension was in February 2007, when the end of the MHPA was postponed to December 31, 2007.
All indications are that the bill will be extended again, and mental health programs will maintain the same benefits as they do today.
Many people have questions about Pennsylvania employee benefits. Like a lot of questions in labor law, the answers could be more complex than expected. A frequently asked question is, “Can the insurer set a low limit for treatments related to mental health?” Other questions are about state or federal laws. Does any law demand the insurers to cover mental health treatments?
The easiest answer is that there is no law that obliges any group health insurance plan to cover mental health treatments. That is optional. Many employers offer plans that do cover such treatments, but many plans don’t. Sometimes the coverage includes treatment in a hospital, while other plans include outpatient treatment.
More than 150 million Americans employees are covered under plans under the jurisdiction of the Employee Benefits Security Administration, ESBA. This federal government agency enforces the law about employee benefits and pension plans, and their name reflects this mission.
Pennsylvania is similar to Oregon, in that the state has what is called the Unemployment Compensation Trust Fund. That is where all employers’ contributions go when they pay their unemployment insurance taxes. The state then uses the trust fund to pay out the benefits to the unemployed workers out there in the Keystone State.
And like in Oregon, for the system to work properly in Pennsylvania, it takes more than money. Employers in Pennsylvania have to provide the state system with quarterly reports on all of their wages paid and covered under the unemployment insurance regulations, and they must also pay out their contributions on a quarterly basis based on these wage reports.
And like in Oregon—and basically in any state—employers in Pennsylvania must have an up to date and accurate personnel file system in order to track all of the info on their workers, former and current, that the unemployment insurance system relies on to pay the right benefits to the right unemployed adults.
For instance, the state of Pennsylvania strongly recommends that all employers in the state have complete employment and payroll records for all of their employees, going back to the time that your company started. You should also have cash books, journals, corporate minutes, and ledgers. The state officials suggest that you keep these records for up to four years until unemployment benefits related to them are paid off.
The Pennsylvania folks also recommend keeping absence reports for up to two years after you pay out the last of the benefits for a certain employee. Absence reports, don’t forget, can go a long way to help you explain why an employee was not laid off, but fired instead (and thus not deserved of unemployment benefits). For all of these records, you should have them all stored in one location, and accessible in case the state officials themselves want to take a look.