All employers in New York are responsible for contributing to the Unemployment Insurance Fund, which finances benefits to claimants. When a former employee resigns or is terminated from his or her position, the employer may receive notice that the former employee has applied for unemployment insurance benefits. This directly impacts the employer, as any successful claim by a former employee increases the contribution rate for the employer, which can be costly. Wherever practicable, employers contest claims that have no merit. This article highlights some of the common areas of dispute arising out of unemployment insurance claims that the New York Department of Labor (DOL) has previously ruled upon.
For an employee to be disqualified for an unemployment insurance claim, the employee must have (1) voluntarily separated from the employment and (2) done so without good cause. Therefore, if an employer terminates the employment relationship, absent misconduct, or provides an employee with good cause to resign, the claim may be valid.
There are some ways in which an involuntary termination can exist even if the employee is not “fired” by the employer:
- Ultimatums: When an employee is told to resign or else be fired, the employee does not have a choice in the matter except to end the employment relationship, making the resignation involuntary. However, if the employee’s misconduct is the basis of the termination, the misconduct was a “volitional act” and therefore makes the termination voluntary.
- Imminent termination: Employees who receive notice that they are to be terminated sometimes elect to stop showing up to work, or if the termination is effective later that day, employees may decide to immediately leave work. The DOL has stated that any departure from work on the last day does not itself cause a voluntary termination, and has even ruled that where an employee did not show up for work for the final two days of employment, the termination did not lose its status as involuntary.
- Expiration of temporary employment agreement: If it is agreed upon at the time of hiring that an employment relationship will exist until a certain date, the employee would be involuntarily terminated at the conclusion of the relationship if no further work is provided. However, if the employer extends an offer to provide further work after that date, rejection of such an offer creates a voluntary resignation and disqualifies an insurance claim. Similarly, an employee who must resign to attend school because the employer refuses to accommodate the new semester’s schedule does so voluntarily.
- Temporary layoffs: Employers sometimes must temporarily lay off employees due to shortage of work. Unless these employees have a reasonable expectation of being rehired, or terms of a contract or bargaining agreement guarantee job retention rights, they may be able to file an unemployment insurance claim due to involuntary termination. However, the existence of a contract or collective bargaining agreement that waives an employee’s job retention rights, and specifies the date the employee will be recalled, would negate the involuntary status.
Good Cause for Voluntary Separation
Even when an employee terminates the employment relationship voluntarily, there may have been a “good cause” for the employee’s resignation. If such good cause exists, the claim for unemployment insurance may be approved. Good cause has been previously recognized in the following situations:
- Anticipation of business shutdown: If an employer announces that a layoff will be required to prevent an otherwise unavoidable shutdown, an employee may accept a financial incentive to be terminated as a part of the layoff. The employee’s voluntary act to sever employment would be considered good cause.
- Taking care of children: An employee who has no alternatives except to discontinue working in order to take care of a young child, does so with good cause. This would not be the case if the child is capable of caring for his or herself.
- Annoyances: It is possible for an employee to experience harassment or annoyances that are so great, working conditions become intolerable and the employee has good cause to resign. An employee is more likely to prevail if his or her health is adversely affected, or if his or her honesty or integrity is constantly and unjustifiably discredited. Failure to get along with a supervisor, clash in personality between coworkers, or comments that are actually constructive criticism would not contribute to good cause.
- Discrimination: If an employee is the victim of unlawful discrimination, there may be good cause to voluntarily resign. For example, intentionally paying a female employee less than other employees just because of her gender may entitle that employee an unemployment insurance claim if she chooses to resign.
- Conditions adversely affecting health: If a work condition continuously affects an employee’s health in an adverse manner, or causes an employee to reasonably fear for his or her safety, good cause may exist. Conditions that are temporary or minor, such as lack of heat in an office for two days, have been found by the DOL to not constitute good cause.
- Conditions causing hardship: If work conditions change such that an employee experiences a hardship, rather than an inconvenience, there may be good cause for resignation. Good cause has been found when significant increases in work hours or duties are not accompanied by an increase in pay, but has been denied when a change in shift times interferes with a claimant’s social life, or adds more hours than the applicant normally expects.
- Breach of employment contract: Changes in conditions that breach the original contract could create good cause. Unemployment claims have been approved when vacation time, wage increases, and promotion opportunities were not offered, although promised to the employee upon hire. Asking an employee to periodically perform unexpected tasks would not likely create good cause, but where an employee had reason to expect to perform skilled work and is provided only unskilled work, good cause may exist. Voluntary resignation due to a mere dissatisfaction with conditions would not likely lead to a valid insurance claim.
Employers may generally terminate their employees, even though good cause may exist, without becoming liable to the employee. However, successful unemployment insurance claims against an employer may result in increased contribution rates. The success of a claim is highly dependent on the specific circumstances surrounding the termination of the employment relationship.