The unemployment rate is gradually declining, but my own personal barometer — based on the admittedly unscientific measurement of questions people ask me because they know I’m an employment lawyer — shows that interest in unemployment remains high. Employers and employees want to know the same thing: What reasons for leaving a job disqualify someone from getting benefits?
Here in California, the rules about eligibility for unemployment are among the most generous in the country. An employee who quits a job for good cause can still get benefits. Good cause includes not only job-related reasons (such as dangerous working conditions or harassment) but also circumstances wholly apart from work. For example, if you quit your job because you need to relocate with your spouse, escape domestic violence, or care for an ailing family member, you will likely be eligible for unemployment benefits.
Employees who are fired can get benefits unless the termination was based on misconduct. If that sounds like a low standard, that’s only because you haven’t heard how California defines the term. An employee has committed misconduct only if all of the following are true:
- The employee owed a material duty to the employer, such as showing up for work.
- The employee substantially breached that duty: A minor or one-time transgression isn’t enough to meet this requirement.
- The employee showed a wanton or willful disregard for that duty. In other words, the employee wasn’t just careless or thoughtless but, instead, intentionally violated the duty or showed a reckless disregard for the consequences of your breach of the duty. Inefficiency, inability to perform the job, or good faith errors in judgment don’t meet this standard and won’t render someone ineligible for benefits.
- The employee’s breach tends to materially harm the employer’s business interests.
That third factor is the key that unlocks benefits for many fired employees. Poor performance, mistakes, and even incompetence are not supposed to be enough to deny benefits: The intention requirement in the standard means the employee must have been making a choice, either to engage in wrongdoing or to perform poorly. An employee who really can’t do the job is supposed to get benefits. (For comprehensive — and comprehensible — information on unemployment in California, check out the Unemployment Insurance page at the website of the always awesome Employment Law Center.)
Some of the questions I’ve been asked lately (on the employer side) kind of remind me of that old Mad Magazine cartoon, “Unclear on the Concept.” Here are a couple of examples:
Can we ask employees to waive the right to collect unemployment in a severance agreement? Only if you don’t mind breaking the law. In California, unemployment benefits may not be waived. A contractual agreement by an employee to give up the right to apply for or collect unemployment is void and invalid. What’s more, severance pay ordinarily doesn’t count as “wages,” and so doesn’t reduce the amount of benefits a former employee can collect. (If severance is paid out over time as if it were wages, the employee may have to delay collecting benefits.)
Can we ask employees to agree that failing to meet our performance standards constitutes a voluntary quit? Same answer. It really doesn’t matter what you require employees to agree to: Employees are entitled to benefits when they lose their jobs unless they commit misconduct, as defined above, or quit without good cause, also as defined above. The EDD doesn’t care how you redefine these terms in a performance improvement plan or employment contract. If an employee is terminated because of poor performance, that is not a voluntary quit. In fact, employers who try this strategy might be facing more problems than an increase in unemployment claims: Requiring employees to sign a contract that you know you can’t enforce could arguably constitute an unfair business practice, which takes an employer into territory where huge damages can be awarded.
To return to the title of this post, it is almost never in the employer’s interest to try to contest benefits this aggressively. Fighting an employee’s claim on dodgy grounds will turn the employees you still have against you: They will find out about it, and they will not be feeling the love. It will take time and money to appeal employee claims. And you will make a bitter enemy of the employee you fired, one who has every incentive to file a lawsuit against your company. By all means, challenge claims by bad apples who are trying to game the system, who truly committed misconduct, who quit for no good reason, who stopped even trying to do their jobs months before you fired them. But otherwise, it’s generally best to let the system do what it’s supposed to do: provide some help to those who have lost their jobs through no fault of their own, until they can find new work.