Category: Termination

Contesting New York Unemployment

Contesting New York Unemployment Claims

Are departing employees eligible for unemployment? As usual, it depends. To claim unemployment insurance benefits in New York, employees usually must be totally unemployed, yet available for and seeking work. After that, the most important factors are whether the employee has worked long enough to qualify and the reason for separation from employment. Here, we’ll focus on that last question, as it’s the one employers most often use in contesting unemployment claims.

Before we go any further, here are related free webinars that might interest you:

Why Isn’t the Employee Working?

Unemployed individuals with sufficient recent work history will receive unemployment insurance benefits unless they became unemployed because of a disqualifying reason.

The primary disqualifying reasons for loss of employment are:

  • Voluntary resignation
  • Misconduct

Neither category is entirely straightforward under New York’s unemployment law.

Voluntary Resignation

Employees who quite a job entirely of their own accord usually will not receive unemployment benefits. However, there are some exceptions.

First, the departure must be truly voluntary. Employees who have no real choice but to “resign” may still receive unemployment. This could occur where the employer gives the employee the option to either resign or be terminated. It also includes situations where the employer was treating the employee unlawfully such that the employee understandably felt compelled to leave.

A second scenario is more surprising to employers. Suppose an employee resigns from Company A to work for Company B. If the employee then loses their job with Company B soon enough and for a non-disqualifying reason, then Company A may be credited with some portion of the employee’s resulting unemployment claim. Company A seldom can do anything to avoid or contest this result.

Misconduct

Many employees lose their jobs due to workplace misconduct. However, many of those employees will still receive unemployment benefits. Even when employers contest unemployment claims, proving disqualifying misconduct is difficult.

To win an unemployment claim based on misconduct, an employer must prove either extremely bad behavior or prior specific warning of the consequences for the behavior. In most cases, poor performance will not rise to the level of misconduct under the New York unemployment law.

Examples of misconduct that may justify a denial of unemployment benefits include theft, physical violence, falsifying documents, and workplace drug use. In addition, any misconduct that constitutes a felony should disqualify an employee.

Many other forms of misconduct that support termination of employment will not necessarily result in denial of benefits. These may include poor attendance, insubordination, carelessness, and violation of employer rules. However, any of these behaviors could constitute disqualifying misconduct under the right circumstances. Usually, this requires prior warning of the specific improper behavior and the future consequence of termination followed by more incidents.

Overall, the analysis of misconduct depends on the facts. But close calls usually get decided in the employee’s favor.

Minimizing Successful Unemployment Claims

Most New York employers of any size must accept some unemployment claims as part of doing business. Obviously, one way to avoid these claims would be never to let anyone go against their will. But that probably isn’t a good business model.

Employers who want to minimize the impact on their claims history can take precautions before discharging employees. This includes having clear discipline policies that spell out what forms of conduct are unacceptable. But that alone probably is not enough. Even if not written into policy, most employers will want to follow the concept of progressive discipline. This allows that extreme misconduct will cost employees their job in the first instance. However, employees will get a second chance for less consequential missteps. Any discipline notices should then include specific language about the consequences of further violations. When warranted, that would be termination of employment. With that prior warning in place, an employer’s chances of contesting the employee’s unemployment claim will increase.

For more about ending the employment relationship, check out these webinars: Don’t Fire Me on Friday and Conducting Your Next Reduction in Force.

At-Will Employment Myth

Is At-Will Employment a Myth?

Forty-nine of 50 U.S. states (all but Montana) still formally recognize the at-will employment doctrine. This principle means that either the employer or employee may end an employment relationship at any time, with or without notice, for any reason or no reason at all.  However, there are now many separate limitations on employers’ rights to terminate an employee’s employment. So many that employers should almost never rely on the at-will employment doctrine alone to justify letting an employee go.

Related Webinars:

Should We Throw Out At-Will Employment?

No. At-will employment is still a fundamental premise for the employment relationship.

If nothing else, it places the burden on the employee to prove that their employer violated their individual rights. This helps prevent meritless litigation.

But there is more. It also establishes that any employment is of an indefinite nature by default. That’s the primary reason why its important for employers to reference at-will employment in offer letters, employment contracts, and employee handbooks. Although not always necessary, reciting the at-will employment rule helps eliminate any doubt whether the employment was intended for a specific term.

How Then Is At-Will Employment a Myth?

Fair question. Why do lawyers both emphasize at-will employment and downplay it at the same time?

Basically, while it doesn’t provide much, at-will employment is still the most flexible starting point for employers.

Despite “at-will employment,” an array of employment discrimination laws now place many restrictions on reasons why employers CAN’T fire someone. But there are still a nearly infinite number of reasons why you CAN separate an employee.

Employers can further yield their discretion to end the employment relationship. This is done through contracts–typically, either employment agreements with individual employees or collective bargaining agreements with unions representing groups of employees.

One prevalent contractual limitation on employers’ power to end employment is the “just cause” or “for cause” requirement. Most employers only offer “just cause” protection when they have diminished leverage or increased motivation to satisfy the employees.

These protections are virtually automatic (though not mandatory) components of union contracts. There they are often undefined, with “cause” left to an arbitrator’s discretion.

Some employment agreements also replace “at-will” employment with “for cause” protection. These contracts (especially for higher level employees) often include a definition of what constitutes cause. However, even those definitions are sometimes relatively vague. For example, “cause” may include “poor performance” or “gross misconduct,” terms that are subject to interpretation.

Note: Many public (i.e., governmental) employees obtain constitutional, and often statutory, protections against arbitrary employment terminations. However, some categories of public employees will still default to at-will employment.

Don’t Play the At-Will Employment Card!

Even assuming an employee does technically have at-will employment, it’s risky to wave that around as the basis for discharge. You should always have a better reason than no reason!

In reality, every employer (a) has a reason and (b) knows the reason before they get rid of an employee. Pretending otherwise isn’t believable. So, if you tell the employee, “You’re employed at will, so we don’t have to tell you why you’re being fired,” they will hear, “We don’t want you to know why you’re being fired.” Some will then interpret this to mean, “We can’t tell you why you’re being fired, because it’s an illegal reason.”

So (unless, I suppose, you’re firing an employee for an illegal reason) you probably want to at least clue them into what the real reason is. Sure, there could be a situation where the specifics of a valid termination decision are confidential state secrets. But those are rare, and there’s still a way to deliver a better message than “Because . . . AT-WILL EMPLOYMENT.”

For more about ending the employment relationship, check out these webinars: Don’t Fire Me on Friday and Conducting Your Next Reduction in Force.

Workforce Downsizing Selection Procedures

Workforce Downsizing Selection Procedures

Even if it will only affect a small part of the business, many companies face workforce downsizing at some point. The “why” is usually obvious. But it’s often more difficult to decide how to make these cuts. Here, I’ll suggest a general approach to selecting who will stay and who will go in consideration of possible legal constraints.

For more on this topic, check out my free webinar: Conducting Your Next Reduction in Force.

What’s the Motivation?

Money makes the world go ’round, and it’s usually what prompts companies to downsize their workforces. But finances aren’t the only reason organizations reduce their headcount.

Here are a few other reasons why a business may downsize:

  • Transition to New Operating Method
  • Automation of Functions
  • Elimination of Redundancies
  • Reallocation of Talent

Whatever the reason, make sure everyone involved in organizing the reduction in force understands it before they choose individual positions and employees. The company should document the rationale up-front. Then move on to evaluating how best to achieve the desired business outcome.

Don’t Identify People First

To best prevent and defend against claims by affected employees, companies should leave the identification of specific employees to the end of the selection process. The earlier specific employees are identified, the more likely they are to perceive the decision as being personal. Thus, the more likely they may believe the decision was discriminatory or in violation of their personal rights.

Sure, if the whole purpose is to outsource all engineering functions, and your company has two engineers, it will be obvious early on who will lose their jobs. But at least make sure there is a valid, documented reason for eliminating the internal engineering function. (Think about the scenario where your two engineers are in their 60s and are longtime employees. Be prepared to prove that their age isn’t the reason for the company’s decision!)

Especially where the goal is to reduce overall labor costs, most companies should start from the premise that all facets of the workforce are in play. Some will quickly narrow in on particular departments or job functions. But again, the rationale for those decisions should be documented as you move down the path toward the selection of individual employees.

Determine the Workforce Goal

Through the reduction analysis, the company should ultimately determine what it wants its workforce to look like after the downsizing is complete. This still doesn’t mean who the specific employees are. Instead, the focus is on functions, tasks, skills, etc.

For example, a company that initially has 125 employees may decide that it would operate best with about 100 employees. It then determines that all “front office” functions are still necessary–say, 25 employees. Of the other 75 post-reduction positions, 50 may be in production and 25 in sales/customer service. If there are currently 65 production employees and 35 sales/customer service employees, then the company must eliminate 15 production positions and 10 sales/customer service roles.

Next, the company must decide how to choose the 15 production and 10 sales/customer service employees to let go.

The company has options to get to the desired workforce size. It could gradually downsize by attrition when people leave. Or it could offer an incentive for employees to voluntarily resign. But here we’ll assume the company wants to reduce the workforce all at once through involuntary terminations–what many would call a layoff.

Picking the People

This component of workforce downsizing often becomes the most personal. It also creates the greatest risks of claims by affected employees. So, it’s important for the company to make these decisions without considering protected individual characteristics.

As discussed, ideally managers shouldn’t sit around the room and just throw out names of whom they want to see leave. Instead, the company should determine a structured selection process and apply it consistently.

Selection procedures may end up being objective or relatively subjective.

One straightforward objective selection criteria is length of service. If the company in the above example wanted to, it could just retain the 50 production and 25 sales/customer service employees who have been with the company the longest. The biggest downside to seniority-based workforce downsizing is that it doesn’t account for employees’ relative job performance and skillsets.

Subjective selection criteria, such as most performance evaluations, increase the risk of manager bias, if unintentional. Supervisors may naturally recognize people like them (based on age, race, sex, etc.) as being higher performers. Thus, it may be better to have multiple managers evaluate each individual and arrive at some quantifiable measure. Then the company would rank all the employees and keep the top ones.

No selection method is perfect. But it is important to establish the selection procedure before applying it to particular employees. Applying one method and then starting over after it doesn’t result in the “right” people being chosen adds risks to the equation. A company should specifically document why it changed course, assuming it has a legitimate non-discriminatory business reason to do so.

Additional Factors and Hurdles to Workforce Downsizing

The above analysis assumes employers have full discretion to determine which employees to let go in a workforce downsizing program. However, that might not always be the case.

If there is a union involved, the collective bargaining agreement may dictate how a reduction in force will occur. For example, unions often bargain for layoff based on inverse seniority. The union contract might also provide for severance pay that could affect the size of the reduction that the company pursues. Or it could even result in the company avoiding reductions in the unionized workforce altogether.

Some companies also have contracts with individual employees. These might either guarantee employment for a certain amount of time or, again, require severance pay.

Finally, even a carefully prepared employee selection process could produce arguably discriminatory results. If a disproportionate number of the employees losing their job share the same protected characteristic (e.g, race, sex), then the employees might have a claim for disparate impact employment discrimination. That type of claim can be viable even if the company had no intent to discriminate. When workforce downsizing involves a large enough pool of employees, employers can conduct statistical analyses to evaluate latent bias in their selection process. Skewed results may be one good reason to rework the selection procedure and start again.

For more on workforce downsizing, check out my free webinar on Conducting Your Next Reduction in Force.