Protecting Your Unemployment Insurance Account

A Guide for Shoe Retailers

By Alan Miklofsky

Updated 10/9/24

As a shoe retailer, running a successful business requires more than just providing great customer service and managing inventory effectively. One of the less visible but equally important aspects of business management is controlling your expenses, including your unemployment insurance (UI) account.

When an employee is dismissed from your store, there's a chance they may file for unemployment benefits, even if their termination was justified. If not managed correctly, these claims can raise your UI tax rates, ultimately affecting your bottom line. Here’s how shoe retailers can prevent their unemployment insurance accounts from being unfairly penalized when terminating employees with cause.

Understanding Unemployment Insurance and "Cause" for Termination

Unemployment insurance is designed to assist employees who lose their job through no fault of their own, such as layoffs due to downsizing. However, it’s not intended for those who are dismissed for valid reasons, such as poor performance, misconduct, or violation of company policies. When an employee is terminated "with cause," they are generally not eligible for unemployment benefits.

However, the burden of proof falls on the employer to demonstrate that the termination was for a valid reason. If you’re not prepared to provide evidence or don't understand the process, your business could be held accountable, resulting in an increase in your unemployment insurance premiums.

1. Establish Clear Policies and Expectations

Create and maintain a comprehensive employee handbook that clearly defines company policies, employee responsibilities, and behaviors that may lead to disciplinary action or termination. Some critical areas to address include:

• Attendance and punctuality expectations

• Customer service standards

• Use of store resources (e.g., discounts and inventory)

• Prohibited conduct (e.g., theft, insubordination, harassment)

Having written policies that are regularly updated and consistently enforced ensures that employees know what is expected of them and what could lead to termination. Additionally, this documentation will support your case if an employee disputes their dismissal.

2. Document Performance and Behavioral Issues Thoroughly

When dealing with underperforming or problematic employees, proper documentation is essential. Maintain a record of any disciplinary actions, performance reviews, and coaching sessions. This record should include:

• Dates and descriptions of the issues.

• Warnings given (verbal or written) and corrective actions suggested.

• The employee's response or lack of improvement.

By having a clear paper trail, you can demonstrate that the termination was not arbitrary but was based on documented performance issues. This evidence will be crucial if the employee challenges their dismissal and applies for unemployment benefits.

3. Conduct Exit Interviews and Communicate Reasons for Termination Clearly

When terminating an employee, always conduct an exit interview. Clearly communicate the reasons for termination and include them in a written dismissal notice. This notice should reference any prior disciplinary actions, warnings, and company policies that were violated.

Be respectful but firm during this process. Avoid ambiguity—use specific language that ties the dismissal to documented performance or behavioral issues. If the terminated employee later applies for unemployment, you’ll have an official record of the reason for their departure.

4. Respond Promptly to Unemployment Claims

If a former employee files for unemployment benefits, the unemployment office will notify you. It’s vital to respond promptly and accurately to the claim. Provide:

• A detailed account of the reason for termination.

• Copies of supporting documentation (e.g., warnings, performance reviews, termination notices).

• Statements from witnesses, if applicable.

Failing to respond to an unemployment claim or missing the deadline can result in benefits being granted by default, even if the dismissal was with cause. Avoid this by setting reminders and keeping detailed records that are easily accessible.

5. Be Prepared to Appeal Unfair Rulings

If your response is challenged or benefits are granted despite your evidence, you have the right to appeal the decision. During the appeal process, you’ll need to present additional evidence and possibly testify before a judge or UI board.

When preparing your appeal:

• Review the initial determination and note areas where you disagree.

• Gather additional documentation, such as timecards, surveillance footage (if relevant), or customer complaints.

• Prepare clear and concise testimony about the events leading up to the dismissal.

It may be worthwhile to seek legal advice or consult with a human resources professional to guide you through the process. Winning an appeal can prevent an increase in your UI premiums and set a precedent that will benefit your business in future cases.

6. Educate and Train Your Management Team

Often, the responsibility for firing employees falls on store managers. Ensure they are well-versed in proper documentation procedures and understand the implications of unemployment insurance claims. Investing in HR training for your management team can go a long way toward protecting your UI account.

7. Consider Hiring an Unemployment Claims Management Service

For larger shoe retailers, it might be beneficial to partner with an unemployment claims management service. These professionals specialize in handling unemployment claims, preparing documentation, and representing your business during hearings. While there’s a cost associated with these services, it may be outweighed by the savings from maintaining a lower UI tax rate.

Conclusion

Effectively managing your unemployment insurance account starts long before an employee is terminated. By establishing clear policies, documenting issues consistently, and responding promptly to claims, shoe retailers can protect their UI accounts and ensure that their premiums aren’t unfairly increased. This proactive approach can save your business money and help maintain a fair and balanced work environment.

Being prepared and informed is key. If you take the necessary steps, you’ll not only protect your business financially but also create a more structured and disciplined workplace, setting up your shoe store for long-term success.