Shield your veterinary practice from unemployment claims

Into every practice, a little rain must fall. Or, in this case, unemployment claims. Whether these claims strike as a single raindrop or a full-fledged storm, they can be confusing, even for seasoned managers. Some managers even avoid terminating employees because they're afraid the employee will file a claim for unemployment benefits and the employer's Unemployment Insurance (UI) tax rate will go up. But in many cases you can fight unemployment claims successfully, regardless of whether you terminate employees or they've quit.

First, let's examine the circumstances in which an employee qualifies for benefits. Employees are entitled to unemployment benefits if they've lost their job due to lack of work, if their job was eliminated, if the company went out of business, or if they were terminated due to performance or job qualifications. In most cases, employees aren't entitled to unemployment benefits when they're terminated for violating a company policy, rule, or procedure; when they get into a dispute with their co-workers or boss; or when they quit. The benefit eligibility will vary from state to state, so it's best to check individual state labor department websites for a complete list of reasons.

Why claims matter

Most hospital managers know that paying out unemployment claims will ultimately cost your practice money, even through your practice doesn't directly pay the claim. This is the biggest reason you'll want to limit the number of claims made by former employees. The amount your practice pays out in claims is reflected in your unemployment insurance (UI) rate.

UI rates vary by state. A practice's UI rate will also vary based on how often former employees have collected unemployment benefits. If you've paid a number of claims, your UI rate will likely be higher. This can make a huge impact on the amount of UI tax a practice has to pay out each payroll period. The following example will illustrate how much savings a company could realize by reducing its rate.

In the state of New York, the UI tax rates range from 1.5 percent to 9.9 percent. The UI tax rate is charged on the first $8,500 of each employee's earnings (see "Example: Unemployment Insurance Rates" above).

Because a practice's UI tax rate is determined by its claims, the higher the number of paid claims, the higher the tax rate. Keeping a low UI tax rate can save a practice thousands of dollars a year. That savings can allow you to offer more benefits, increase salaries, or afford new equipment. Being diligent about fighting inappropriate claims leaves more money to spend on your most valuable resource: your hardworking team members.

Create an umbrella of protection

Now that you understand when employees will qualify for unemployment benefits—and when they won't—you can create organizational procedures to minimize unemployment claims. This begins with setting company policies. These policies can include procedures regarding absenteeism, tardiness, theft, record keeping, abuse, communication, and many other issues. Just remember, these policies need to be written. To successfully fight an unemployment claim, you'll need to provide proper documentation that a policy existed and that the employee knew about it.

The bottom line: If an employee knew about a company policy, their supervisor took steps to correct her inappropriate behavior, and the behavior resulted in termination, you can challenge the employee's right to collect unemployment insurance.

Consider this example: The practice manager of ABC Animal Hospital hires Mary as a client service representative. Mary receives a copy of the employee handbook when she's hired, and she signs an acknowledgement that she received the handbook. ABC Animal Hospital offers an extensive training program that details the policies and procedures employees are expected to follow. The training includes handouts that explain these procedures. After finishing her training, Mary works independently and does well as a client service representative.

During her third month of employment, Mary decides that it's no longer important to wear her lab coat and nametag during work hours, even though she's been trained and signed off on the dress code outlined in the employee handbook and the training program. Mary's supervisor discovers that Mary isn't consistently following the dress code. The supervisor meets with Mary and re-explains the dress code policy. Mary receives a copy of the dress code policy so she can review it. Mary agrees to begin wearing her lab coat and nametag again. Two weeks later, the manager learns Mary has stopped following the dress code. Her supervisor meets with her again, explains again the importance of the dress code, and documents the policy violation in Mary's employee folder. The manager also reviews the consequences of violating this policy a third time, saying, "Termination is possible if you violate this policy again." And Mary receives a copy of the warning notice.

Another month goes by, and Mary wears her lab coat and nametag during her shift. Then her supervisor stops in unexpectedly on a Saturday morning and finds Mary without a lab coat and nametag. The following Monday, the manager terminates Mary. Mary promptly goes to the unemployment office to file a claim.

The unemployment claim arrives at ABC Animal Hospital two weeks later. Mary's supervisor verifies the date of employment and wages and returns the documents by their due date. In this case, Mary wasn't entitled to unemployment benefits, but her manager didn't know that she could fight the claim. ?

Plan for the rainy day

Although they may vary from state to state, unemployment insurance papers like the ones Mary filled out usually consist of two parts. The first part might read, "Notice of potential charges." This portion outlines employment dates and wages earned. Normally, the employer will verify these dates and wages, make any needed changes, and return the papers to the unemployment office. The second part might read, "Notice of protest." In this section, an employer has the opportunity to state a reason that the employee isn't entitled to benefits. In this case, the reason for Mary's termination would be misconduct. Mary's supervisor would check this box and attach documentation outlining the reason for termination. She would include copies of any documentation that pertained to the dress code policy. These might include the training program or employee handbook section, any signed acknowledgements of the policy, and the documentation of the employee meetings where the supervisor reviewed the violation with Mary. In this case, the unemployment office should find in favor of ABC Animal Hospital.

If a finding favors Mary, ABC Animal Hospital should request a hearing. If a hearing is granted, a mediator or judge will most likely meet with the employer and the employee. This can take place in person at a local Department of Labor office or as a conference phone call.

You should prepare for this meeting by having all paperwork at hand and familiarizing yourself with it. Have any witnesses present if possible. The judge will want to hear both sides of the argument. Stick to the facts and to the sole reason for termination. Don't bring any other violations or behaviors into the conversation.

Don't get wet

To contest a claim successfully, it's important to follow these guidelines:

• Create written policies and procedures and train employees regarding them. To use a policy violation as a defense to fight a claim, you must show there's a written policy the employee knew about before committing the violation. The best policies are ones you include in the employee handbook and your training programs, because the employee must sign a statement that he or she read and understood the policy. Be sure all signed documents include the date.

• Follow up on policy violations, and document conversations and expectations. This includes all infractions and meetings to correct the infraction. If another employee reports a policy violation, get the employee's permission to document the testimony. Ask the witness to write something in her own words with a signature and date.

When you're dealing with performance issues, most often an employee will be entitled to benefits. However, if an employee previously performed a task correctly and his or her performance declined, you can use this information to dispute a claim. Document this change with training sheets and performance appraisals, if applicable. You can also use employee warning notices and the employee's commitment to performance improvement. Just be aware that this defense won't work in all cases. Sometimes the mediator will find in favor of the former employee.

• Use one specific reason for the termination. Avoid using a general phrase, like poor performance. Use a specific description, such as continual violation of the dress code policy. Then attach a copy of the dress code policy as well as any previous warning notices you issued for violations and any signed employee handbook or policy agreements. And remember, submit copies only. Just like medical records, you need to keep the originals for your employee files. Any documentation that backs up your case is pertinent. For complicated cases, it's helpful to attach a sheet with a specific chain of events to demonstrate why you're disputing the claim.

• Submit your information to the unemployment board as soon as possible after you receive the claim. Both parts don't need to be sent back at the same time, but it's important to respond in a timely fashion.

• Keep a copy of all of the paperwork you submit. When the unemployment-claims caseworker contacts you to verify information, you will need to refer to it.

If you dispute a claim immediately, it's more likely the former employee's benefits will be denied. However, don't dispute the claim just to be spiteful. The laws exist to protect us and employees, so stick to them.

When in doubt, contact the labor board. An unemployment officer can help determine if a claim is legitimate. Be ready with copies of all forms submitted as well as the employee file. They may ask for something that wasn't included in the original submission. This may include a written policy, a statement from another co-worker about the incident, or further details about the information you submitted. Don't be afraid of the labor department. They exist as much for the employer as the employee. Every manager should have a contact at the labor board to help with labor questions.

Occasionally, when benefits are denied, a former employee will request a hearing. In this case, a judge will hear the case in person or over the phone. He or she will ask questions about the case and make a decision. Employers also have the right to request a hearing if they don't agree with a decision to extend benefits to a former employee.

Although claims will continue to be a part of running a business, understanding the process will help minimize the impact on your veterinary practice. Don't be afraid to work with the local labor board to structure policies that will minimize the number of claims you see. And then practice what you preach. Each claim you fight will reinforce what you're doing well and what you might need to change to avoid paying a claim in the future.

Marie E. McNamara, MBA, CVPM, is the hospital administrator at New Hartford Animal Hospital in New Hartford, N.Y. To comment, visit dvm360.com/community.