Topic Employee Benefits

What Disqualifies Employees from Receiving Unemployment Benefits?

What Disqualifies Employees from Receiving Unemployment Benefits?

Unemployment claims come with a series of downsides, not the least of which is an increase in your state and federal unemployment taxes. However, in some cases, employees try to claim unemployment benefits when they shouldn't. As such, it is essential to know when to challenge an employment claim and when to accept it as valid. 

The most effective and easy way to keep claims at a minimum is to outsource unemployment claims management to experts in local, state, and federal employment law compliance. However, it is crucial for those who want to manage unemployment claims in-house to know the circumstances under which a claim should be accepted. 

The Importance of State-Specific Regulations 

While there are several commonalities among different states regarding rejecting unemployment claims, each state is allowed to set its own rules and regulations. To keep up with these legal requirements, it is essential to research your own state's laws surrounding unemployment claims. You can readily find your state's specifications by searching for the unemployment department online or going to CareerOneStop, a website sponsored by the U.S. Department of Labor. 

6 Circumstances Where Unemployment Benefits Are Rejected 

While every person's situation is different, several instances can cause a former employee to get disqualified from receiving unemployment benefits. Here are six circumstances where unemployment benefits are rejected. 

Terminated Before the Base Period Ends 

In a nutshell, the base period is a period that allows employees to meet state income and time worked requirements to be eligible for unemployment insurance benefits. Most states have a base period of one year, where the employee made a certain amount and worked for a specific period to claim unemployment. If employees are terminated before the base period ends, they will not be eligible for unemployment compensation. 

Voluntary Quits 

Employees who voluntarily quit their jobs without valid reasons will not be eligible for unemployment benefits. While it might be a good way for workers to explore other opportunities for advancement, it is among the reasons that will disqualify them from receiving unemployment benefits. However, some states allow former employees to receive benefits if they leave employment for credible personal motives. 

Some reasons that might entitle employees to unemployment benefits for quitting a job include: 

  • Constructive discharge: Most states allow workers to receive unemployment when the work situation becomes unbearable, forcing them to quit. Such instances include constant sexual harassment, employer's actions forcing an employee to commit an illegal act, or dangerous working environments. 
  • Medical reasons: Several states allow employees to collect unemployment if they quit because of disability, illness, or injury. However, some states will require the employee to prove the medical condition emerged from the job. 
  • Domestic violence: Many states allow employees who quit their jobs due to domestic violence to collect unemployment benefits. 
  • Care for a family member: Some states permit workers to collect unemployment if they quit to care for a critically ill family member. 

Fails a Drug or Alcohol Test 

Several states consider failing a drug or alcohol test misconduct that can disqualify an employee from receiving unemployment benefits. In addition, employees can be disqualified from getting the benefits if they lose new jobs because of failing a drug or alcohol test.  

Commits Theft 

Most states disqualify employees from unemployment compensation benefits if they are charged with misconduct, such as theft. Whether the employee stole from the company or coworkers, they will most likely be ineligible for unemployment. Some states will deny the employee compensation, followed by other legal matters. Other misconduct behaviors include violence and embezzlement. 

Violates Safety Rules 

Employees who make careless mistakes might qualify for unemployment benefits. However, workers will likely be ineligible to collect unemployment if they willfully, intentionally, or negligently disregard critical safety rules. In addition, since it is considered misconduct when an employee violates a company policy, an employer may argue the claim, limiting the worker from receiving unemployment benefits. 

Receives Severance Pay 

Some states will disqualify employees with a severance package, provided they are getting severance. For example, if a worker receives 12 weeks of severance, they may qualify for unemployment on the 13th week after becoming jobless. In addition, the employer will be required to report the payments as wages before becoming eligible. However, it is essential to understand how severance can affect a worker's unemployment benefits in your state before contesting benefits. 

Bottom Line 

Outsourcing unemployment claims management helps employers fight employees trying to claim unemployment benefits when they are not eligible. If an employee appeals the rejection, the PEO will attend the unemployment hearing on your behalf and represent your best interest.   

Comprehensive HR outsourcing, such as Professional Employer Organizations (PEOs), staff experts in unemployment claims management and will help cut down on your rising unemployment insurance costs. 

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Christie Obrien

Christie Obrien

Christie is a Human Resource Consultant specializing in employee relations, legal compliance, and recruiting.