Employers winning most contested unemployment insurance claims, lawmakers told

From Kentucky’s Legislative Research Commission:

Employers were the winners of the majority of employer-contested unemployment insurance cases in 2010 and are emerging the winners of these types of cases in 2011, state lawmakers were told today by the state official who oversees unemployment insurance for Kentucky.

Education and Workforce Development Cabinet Secretary Joe Meyer, whose Cabinet oversees Kentucky’s unemployment insurance claim division, said that employers—not fired or terminated employees—won 70 percent of the 61,000 unemployment insurance cases contested by employers in 2010. The employers’ success rate for contested cases so far this year is 71 percent, said Meyer.

“In terms of our actual application, and our rulings…70 percent of the time, the employers win,” he told the Interim Joint Committee on Labor and Industry.

The committee had earlier received testimony from some area employers who told lawmakers they have fired employees for documented reasons only to see those employees be awarded unemployment benefits.  Joining the employers during their testimony was Rep. Susan Westrom, D-Lexington, who said the employers “encountered that they’ve fired somebody they thought they had a documented reason to fire, and they (the employee) end up collecting unemployment insurance, which has been very much of a shocker …”

Lexington area insurance salesman, stock broker and real estate broker Ben Kaufmann told lawmakers about a former maintenance employee who Kaufmann said was not where he was supposed to be during work hours and was eventually fired, only to be awarded unemployment by the state.

“I’m scared to death to hire people. We need to do something,” Kaufmann said.

Another employer, Cynthia Bohn of Equus Run Vineyards, recounted scenarios involving a former employee who allegedly committed unemployment insurance fraud and a former worker who received benefits after allegedly not performing well upon job reassignment.

Although employers are winning most of the unemployment insurance cases they contest, Meyer told the committee and others presents that unemployment insurance law is designed to favor the person who is applying for benefits, not the employer. Employers have an “absolute right” to legal representation at benefit determination hearings, said Meyer, but unemployment insurance law is designed to favor the applicant.

“The burden of proof is on the employer,” said Meyer.

Meyer said there are a set of eight standards adopted by the 1982 Kentucky General Assembly that clearly constitute misconduct by a fired or terminated employee under state unemployment insurance law.  If those standards are met, the terminated employee may not receive unemployment benefits. If someone is let go for a reason other than one of those eight standard reasons, Meyer said the employer is responsible for establishing that misconduct was committed by the former employee, if the employer wants to avoid paying benefits.

In short, unsatisfactory work and inability to perform one’s job, in general, are not considered enough reason to deny a person benefits, explained Meyer.

“When you are looking at misconduct for the purposes of unemployment insurance, they really have to identify whether there is an intentional or reckless bad act against the employer’s interest,” he said.

Rep. Bill Farmer, R-Lexington, stressed the need for consistency in the unemployment insurance proceedings. “I think if there were a factor of consistency here…the entire group is going to be better served.” Meyer said the unemployment insurance appeals process is a legal process, and decisions made are in writing.

Committee co-chair Rep. Rick Nelson, D-Middlesboro, said the issue might need to be addressed by the General Assembly, which has addressed the issue in the past.

“It sounds to me like you are playing mostly by the rules that the General Assembly at some point enacted into law. So, if there are any changes to be made, maybe that’s something a legislator needs to address,” said Nelson.

Meyer said there is a state unemployment insurance fraud hotline for someone to contact if fraud is suspected.  Anonymous tips can be submitted to http://www.oet.ky.gov/stop_ui_fraud.htm, or e-mail can be sent to the Kentucky UI Fraud mailbox at oet.uifraud@ky.gov, he said.