CHALLENGING UNEMPLOYMENT CLAIMS IN INDIANA Alison G. Fox R. John Kuehn (574) 239-1988, Alison.Fox@FaegreBD.com (574) 968-0760, jkuehn@lck-law.com 2011 CHANGES As of 2011, Indiana owed over $2 billion to the federal government for unemployment insurance benefits Indiana legislature passed amendments to Indiana s unemployment laws to begin to address this problem (2011): New class of ALJs Appeals hearings by phone (default) Increased responsiveness to inquiries No longer eligible for benefits: On-call or as-needed employees who receive pay or refuse work in any week Employees subject to planned short-term shutdowns an employer mandated vacation period with or without pay Must notify employees at least 6 months in advance or upon hire Employees of Head Start programs on planned breaks Individuals who fail/refuse a pre-hire drug test Claimants who accept payment in exchange for voluntarily resigning/retiring ( considered a voluntary quit ) Have you seen a difference? 1
2013 AMENDMENT: I.C. 22-4-11-1.5 (c) The experience account of an employer may not be relieved of charges for a benefit overpayment from the state's unemployment insurance benefit fund established by IC 22-4-26-1, if the department determines that: (1) the erroneous payment was made because the employer or a person acting on behalf of the employer was at fault in failing to respond in a timely or adequate manner to the department's written request for information relating to the claim for unemployment benefits; and (2) the employer or a person acting on behalf of the employer has established a pattern of failure to respond in a timely or adequate manner to department to department requests described in subdivision (1). 2013 AMENDMENT: I.C. 22-4-11-1.5 (a) As used in this section, "erroneous payment" means a payment that would not have been made but for the failure by an employer or a person acting on behalf of the employer with respect to a claim for unemployment benefits to which the payment relates. (b) As used in this section, "pattern of failure" means a repeated and documented failure by an employer or a person acting on behalf of an employer to respond to requests for information made by the department, taking into consideration the number of failures in relation to the total number of requests received by the employer or the person acting on behalf of an employer. 2
CHALLENGING UNEMPLOYMENT CLAIMS Know when to hold em and when to fold em Meet your deadlines Prove that the employee quit or was discharged for just cause Establish and publish work rules Use witnesses with first-hand knowledge Know what to expect, and expect the unexpected Structure severance pay arrangements properly Use unemployment benefits as a bargaining chip 3
REASONS NOT TO FIGHT Former employee has threatened suit ALJ s findings and conclusions not binding in other litigation, but may be submitted and may influence outcome Testimony at hearing before ALJ is under oath and may be used to impeach witnesses If not thoroughly prepared, could cause problems in other litigation Former employee represented by counsel Employee s attorney can use hearing to get free discovery to support other claims against the employer If find out at the hearing, can ask for postponement in order to be represented by counsel May not be allowed If not going to fight, check the box, and don t submit any evidence or explanations 4
BENEFITS OF FIGHTING Can obtain admissions by the claimant to use in other litigation Admissions by claimants can be used to: Impeach the claimant s credibility Support the employer s defenses If litigation is anticipated or pending, promptly request hearing tapes from Workforce Development 5
DEADLINES ARE STATUTORY A.B. v. Review Bd., 946 N.E.2d 663 (Table) (Ind. App. 2011) Because Indiana Code section 22 4 17 2(e) is jurisdictional in nature, failure to comply with the mandates of the statute results in dismissal of the appeal. CLAIMS PROCEDURE IN A NUTSHELL Claim filed DWD sends Initial Notice of Claim Goes to all Base Period/Separating Employers DWD sends Request for Information Often sent along with initial notice of claim Employer responds to initial notice and request for information DWD Claims Deputy makes initial determination of eligibility Appealable by adverse party Hearing before DWD Administrative Law Judge Appeal to DWD Review Board Appeal directly to Court of Appeals 6
RESPONDING TO A CLAIM Meet all Deadlines Initial Notice of Claim & Request For Information 2 documents, usually received around the same time Initial Protest Form ( check the box ) Must be filed in 10 days Get form off DWD s web page Document/Evidence Checklist: Policy(ies) Acknowledgement of receipt / training Evidence of violation (written discipline, warnings, investigation, police reports, termination letters, photos, etc.) DETERMINATION & APPEAL Claims Deputy makes initial determination of eligibility Notice of Appeal due within ten days or initial determination becomes final Appeals from initial determinations are heard by DWD Administrative Law Judges (ALJs) Once appeal is filed, Administrative Law Judge (ALJ) is appointed Workforce Development will schedule hearing and send out notices Employer can request in-person hearing Notice must be mailed at least 10 days prior to date of appeal hearing 7
HEARING ISSUES Lush v. Review Bd., 944 N.E.2d 492 (Ind. App. 2011) (reinstating claimant's appeal and relying on unemployment Act s humanitarian purposes in finding abuse of discretion where ALJ faulted claimant for failure to appear at telephone hearing) H&R Excavating v. Review Bd., 941 N.E.2d 570 (Table) (Ind. App. 2011) (denying employer's request to reinstate appeal based on cell phone trouble). A.Y. v. Review Bd., 948 N.E.2d 373 (Ind. App. 2011) (remanding to determine whether claimant called ALJ w/ in 45 minutes allotted for her hearing) FURTHER APPEALS Appeal to Review Board Three-member body appointed by Governor Must file within 15 days after date ALJ s decision is mailed to parties Party may not introduce additional evidence unless specifically permitted by Board Review board may affirm, modify, or reverse ALJ s decision Decision becomes final 15 days after mailing Appeal to Indiana Court of Appeals First stage when a court becomes involved in unemployment compensation process Indiana Rules of Appellate Procedure govern proceeding Strict rules More deadlines Court of appeals will review case only for errors of law Will not reweigh evidence or consider new evidence 8
REASONS FOR SEPARATION Employee must prove that he or she is unemployed through no fault of his or her own This means: Being discharged for just cause Quitting voluntarily without good cause 9
DISCHARGE FOR JUST CAUSE Defined by statute Subject to interpretation by the courts Workforce Development gives claimants benefit of doubt Typically awards benefits where there is any question as to whether discharge was for just cause EXAMPLES OF JUST CAUSE Falsification of employment application Knowing violation of reasonable and uniformly enforced rule, including attendance Unsatisfactory attendance (even without rule) Damaging employer s property through willful negligence Refusing to obey instructions Reporting to work under influence, or consuming on premises during work hours Dangerous conduct Incarceration following conviction Breach of any duty related to work reasonably owed to employer Gross misconduct 10
GROSS MISCONDUCT Defined by statute to include: Felony or Class A misdemeanor Reporting to work or working under the influence of alcohol or controlled substance Battery on employer property or during work hours Theft or embezzlement Fraud PROVING JUST CAUSE Employer should focus on these elements: Employee had notice of work rules or job requirements Employee: Was not qualified, or Failed to perform; or Broke the rules Employee had notice of deficiencies Employer gave multiple chances to improve Employer made timely discharge decision not too early, not too late 11
VOLUNTARY QUIT FOR GOOD CAUSE Claimant must show that reasons for leaving job were such that reasonable and prudent person would also have left; and Reasons are related to the Employment EXAMPLES OF GOOD CAUSE Sexual harassment Physical disability substantiated by medical opinion Employer has changed terms and conditions of employment to employee s detriment Employee s religious beliefs prevent continued work with employer Employer compels or requires employee to commit a crime. 12
WRITTEN POLICIES ALJ will ask whether employer has written policy prohibiting conduct or behavior for which employee was discharged Employer is likely to lose if it has no written policy or cannot prove that it notified the claimant about a written policy Employees should sign acknowledgment of receipt of employee handbooks and other employment policies 13
WITNESSES HR personnel Important witnesses to discharge decision Often do not have first-hand knowledge of claimant s conduct Supervisors and other witnesses to the conduct ALJ can accept hearsay evidence, but also can (and do) refuse to consider it Need to call employees with first-hand knowledge May need to involve co-workers Need the witnesses at the hearing in person: affidavits are not good enough 14
Expect an informal trial with witnesses and exhibits Starting over Expect to have the burden of proof In cases involving discharge, Employer bears burden of proving discharge was for just cause Even if Deputy s initial determination was that employee was ineligible for benefits In cases involving voluntary discharge, claimant bears burden of proof BUT, Employer should not change its strategy Expect to have to ask to cross examine, to make closing argument, to present next witness Expect the claimant to make denials 15
EMPLOYER EVIDENCE Documented disciplinary action Documents and things proving poor job performance Attendance records Relevant personnel policies Employee s acknowledgment of receiving relevant policies Testimony of witnesses with first-hand knowledge 16
SEVERANCE ARRANGEMENTS Default: lump sum severance payment treated as compensation only for the week in which payment made Former employees can obtain unemployment compensation benefits after severance expires Before agreeing to pay severance, decide whether this is a problem If so, consider salary continuation instead of lump-sum severance Don t hide the ball: discuss this issue with the employee or counsel as part of the negotiations 17
BARGAINING CHIP Agreement not to contest benefits can be consideration for a release of claims Think about: Why was the employee discharged? Did the employee resign? Does the employer anticipate litigation? What are the employer s chances of succeeding in the unemployment claim? In any potential litigation? Does the employee have an attorney? 18