Some tips to help employers navigate unemployment compensation system

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Unemployment is on the rise in Colorado and the unemployment system is expected to face a record number of claims and to pay out record benefits this year.

Not all of these claims, however, will justify receipt of unemployment benefits. Under the Colorado Employment Security Act, access to unemployment benefits is limited to those persons who were terminated from employment through “no fault” of their own. Unfortunately, many unemployment claims are made each year by persons not entitled to the benefit.

Given this, a basic knowledge of the act and its important limitations is essential to protecting yourself or your company from these costly and frivolous claims.

Award, disqualification

Fault in the context of unemployment has been interpreted to mean a volitional act or exercise of control or choice. Fault results in disqualification from receiving benefits; no fault authorizes a full award in most contexts.

Chief among the no-fault circumstances defined by the act are being laid off for lack of work, a substantial change in work conditions, an unreasonable reduction in the employee’s rate of pay and refusing with good cause to work overtime without reasonable advance notice.

Key among the examples of fault based terminations are quitting because of dissatisfaction with a reasonable supervisor, insubordination, rudeness, insolence, careless or shoddy work, absenteeism and failure to meet job performance or other defined standards.

Identify the reason

The time to raise issues concerning an employee’s performance is before termination. The time to state all the reasons for terminating an employee is at the time of termination.

In making any termination decision, you should define specifically the conduct on which the termination is based and link it to a policy or performance expectancy.

Once you have clearly established the reason for the termination and considered what evidence you have to support the stated reason, the unemployment process becomes simplified.

No waiver

Do not expect a severance agreement or other release to block an unemployment claim.

Any agreement to waive, release or commute rights to unemployment benefits is void. Severance, however, might reduce the benefits awarded to the claimant.

Responding to a claim

The initial unemployment award decision is determined by written submission. No hearing will be held.

It is important to keep in mind, therefore, that the Colorado Department of Labor and Employment only has available to it information and evidence that the employer and claimant provide. Make your case through factual statements and evidence.

Often, an employee is terminated for violating a workplace policy or because of poor job performance.

For such a termination to be adjudged a fault termination and disqualify the claimant from benefits, however, the employer must demonstrate that the work standard or policy was actually “established” or “defined.”

Hearing on appeal

Whether benefits have been awarded or denied will be announced through a Notice of Decision mailed to the employer and claimant. The specific statutory grounds on which the decision relies will be stated.

An employer wanting to contest the award must complete the back of the Notice of Decision, provide a detailed explanation about why the decision is incorrect and attach evidence supporting the reason for the appeal — within 20 days of the date the Notice of Decision is mailed.

A hearing date will be announced shortly thereafter, directing appearance by telephone or in person. Prior to the hearing, the employer must again marshal its evidence supporting the termination and submit it to the hearing officer, as well as the claimant.

You also should announce witnesses you plan to call before the hearing date; again, to both the hearing officer and the claimant.

An employer will not be allowed to present evidence or witnesses not disclosed prior to the hearing, including providing copies of any documents. A person with personal knowledge concerning the termination should be present at the hearing and prepared to testify. Hearsay will not be permitted.

Persons present at the appeal hearing will be questioned by the hearing officer, make any additional statements they wish to make, and will have an opportunity to question one another.

All statements are under oath and on the record.

Legal counsel

If allegations of discrimination or retaliation have been made by a claimant, you should consider the unemployment hearing your first deposition.

Information obtained under oath at the unemployment hearing and any evidence submitted in the unemployment case can be used in subsequent litigation. Your legal counsel can assist you in minimizing potential liabilities both for unemployment and other employment claims by being involved early, even as early as the discipline process leading to termination.

Christie Ryan McCall is an attorney at Holland & Hart LLP. She can be reached at