Money for the Undeserving - Warning: the Vec Is Unimaginably Biased Against Small Business

The CEO of a small business became concerned about his bookkeeper's performance. He couldn't put his finger on the issue, but something wasn't right. The bookkeeper's attitude was poor. She often extended her lunch break beyond the approved time. The books were convoluted and unclear. Exactly what was going on in the business was difficult to determine at best. After months of hesitation, the employer finally lined up a new bookkeeper and dismissed the poor performer. In less than a week, the new bookkeeper discovered that his predecessor had embezzled more than $65,000 by depositing the pay of a fabricated employee into an account she owned. The former bookkeeper subsequently pleaded guilty to embezzlement.

In a move of unimaginable brazenness, the terminated embezzler filed for unemployment. The employer fought the claim citing the theft. The finding of the Virginia Employment Commission (VEC) was that the embezzler was entitled to unemployment compensation because the employer had terminated her prior to discovering the proof her crime. In other words, the VEC rewarded the embezzler for being able to conceal her crime until after her termination.

A home healthcare provider received a complaint about one of its caregivers. The patient's daughter stated that the caregiver had not given food or water to her terminally ill father: a clear violation of company work rules. The daughter demanded that this caregiver never return to her father's house.

Unfortunately, this was not an isolated incident. This was the sixth customer to refuse to allow this caregiver to provide additional services. The complaining customers cited a variety of offenses, including leaving a patient in a soiled diaper for an entire day. The CEO of the home healthcare provider felt that she had no choice but to terminate the employee who had not properly cared for patients. Few would disagree. In the CEO's view, the company had given the employee chance after chance to perform and yet, this caregiver had failed at every turn. The CEO worried that sending this caregiver to yet another client, after so many had refused her services, might leave the company open to litigation if there were a problem. The caregiver was terminated.

Soon thereafter, the former employee filed for unemployment benefits. The home healthcare company fought the claim citing multiple violations of company work rules. After considering the evidence, the VEC determined that the employee was entitled to receive unemployment compensation because the employer had no firsthand knowledge of the poor performance. The evidence was all hearsay, based on what the employer reported clients to have said.

A woman took some time off from her job to have a baby. The small business for which she worked placed her on FMLA leave. When the leave period was about to expire, the company contacted the employee asking when she was planning to return to work. The new mother said that she had decided to stay home with her baby. The company was disappointed to lose an employee, but accepted her decision and sent the appropriate paperwork.

The new mother filed for unemployment compensation. The small business fought the claim citing the employee's verbal resignation and her refusal to come back to work when requested to do so on multiple occasions. The employee disputed neither of these assertions. Further, the company said at the hearing that it was still willing to have the new mother return to work. The VEC found that the company didn't have sufficient proof of the resignation and in spite of the fact that it was willing to have the employee return to work granted her unemployment benefits. The new mother is now enjoying more than 80 weeks with her new baby at taxpayer's expense.

The embezzler, the negligent caregiver, and the new mother who doesn't want to work share one thing in common: they are all receiving benefits they should not be getting and increasing the payments that their former employers are required to pay. The VEC is complicit in this injustice, because of its unbelievable bias toward awarding unemployment benefits when they are not deserved. These three decisions involving small businesses are all real (although they have been disguised). Reading the decisions makes it crystal clear that the VEC will grab at any straw, no matter how flimsy, to allow it to award benefits.

The lesson for small business owners: If you terminate an employee, it's going to be very difficult to prevent him or her from receiving unemployment. Therefore:

Hire carefully so that you minimize the possibility that you will have to terminate the employee later

Depending on the state in which you live, you may be able to avoid your company being charged unemployment if you terminate an employee within a specified number of days/hours of the hire date. Our advice, review all new employees immediately prior to this date. If you are going to terminate the employee, do it before this date.

If an employee resigns, get it in writing. If you can't get it in writing, try to have a witness to the resignation. At a minimum, document the resignation with a copy to the employee and his or her file.

Follow your policies. Giving employees extra chances when they break work rules may weaken your case for denying unemployment when you finally terminate them.

Document every instance of broken work rules. Get everything you can in writing. This is the best chance you have to prevail in an unemployment hearing.

In the current environment, there are no guarantees that you will be able to prevent a terminated employee from receiving undeserved unemployment compensation, but you can tip the odds in your favor.