Responding to Texas Unemployment Claims
The Texas Unemployment Compensation Act (TUCA) provides for the collection and distribution of unemployment benefits to workers in the state of Texas who become unemployed through no fault of their own. Liable employers in Texas (those who meet the minimum liability requirement under TUCA) must report wages paid and pay unemployment taxes per the stipulations of the Act. Some employers may not be familiar with the process that takes place when separated employees file for benefits with the Texas Workforce Commission (TWC). It is important that employers understand this process and know how to respond if they desire to do so. This article gives a brief overview of the process employers follow if they want to appeal a claim filed with TWC but does not give complete information. If you need assistance with determining liability, reporting/paying payroll taxes, or assistance with other unemployment claim matters, consult the TWC or an employment law attorney.
Determination of Eligibility
The TWC is responsible for determining if an applicant is eligible for unemployment benefits. Eligibility is evaluated based on the circumstances of the job separation, the employee’s wages during the base period (the first four of the last five calendar quarters) and other requirements. Employees who have been fired for misconduct are generally not eligible for benefits. It is important to know, however, that “misconduct” in the TWC unemployment setting has a very specific definition. Those who were laid off, forced to resign, fired for reasons other than misconduct, or who quit for certain reasons (e.g. unsafe working conditions, changes to hiring agreement, relocating with spouse, need to care for an ill family member) are also eligible to receive unemployment benefits.
An applicant must also satisfy ongoing eligibility criteria which includes being physically able to work and being available for work, plus, they must meeting certain job search requirements, unless otherwise exempt.
Employer Response to An Unemployment Claim
After a claim is submitted, the TWC contacts the former employer to request wage information and details about the job separation. The employer should respond promptly with all the requested information including:
- Separation reason and complete details,
- Any additional (severance) pay given,
- Employment dates, and
- Name and phone number for a contact person.
Keep in mind that it is best to be specific and to the point regarding the reason for termination and avoid “kitchen sink” explanations where you outline anything and everything you can think of that the employee did wrong. Employers should respond to this initial request for information within 14 calendar days of the date the requests were mailed. Employer responses can be made online via the TWC’s website, by mail, in person, or by fax. If a response is received within 14 days, the employer becomes an interested party to the claim and maintains appeal rights. Interested parties receive a copy of the Determination on Payment of Unemployment Benefits, which explains the decision as to whether or not the employee will receive unemployment benefits related to this claim. Only employers who are interested parties to a claim can appeal a claim decision. The interested parties then have 14 calendar days to appeal a determination on the claim.
An employer who files a response to the TWC’s initial request but misses the deadline, has a response that is determined to be a “late protest” and the determination to pay benefits is a “late protest ruling.” The employer may try to explain the reason for the late response and request a hearing on the merits of their argument. If an employer does not respond at all and the employee receives benefits, the employer receives a “Notice of Maximum Potential Chargeback.”
Employers must then decide if they wish to challenge the decision to award unemployment benefits to the former employee. This is important because when a former employee receives benefits, benefit “chargebacks” are logged to the account of the employer and remain there for three years. These chargebacks are used to determine the unemployment tax rate that a company will pay in the future. The minimum tax rate for 2017 is .50% and the maximum rate is 8.21%. Where an employer falls on the tax rate continuum is determined largely by chargebacks, therefore the incentive to minimize them can be significant if you are an employer with high turnover.
If an employer (who is an interested party) decides to appeal an award of benefits, they must do so in writing, within 14 calendar days of the mail date on the Determination Notice. The appeal can be submitted in person, online, by mail, or by fax. The Appeal Tribunal will review the case at an appeal hearing where the employer will have an opportunity to present information in support of their case.
If the Appeal Tribunal rules against the employer, the employer can appeal again, within 14 calendar days, to the Commission. The Commission will review the information submitted in the appeal and a decision will be mailed to the employer. The employer may request a rehearing within 14 days of the date the Commission’s decision was mailed. A rehearing will be granted only if there is new information about the case, there is a compelling reason why this information was not presented earlier, and the employer has a compelling reason why this information may change the outcome of the case.
If all of these steps fail, the employer may appeal to a civil court within 15 to 28 days after the mailing on the Commission decision. An employer may also appeal in court if their motion for rehearing is denied.
Preventing unemployment claim chargebacks is easiest when an organization implements thoughtful personnel procedures, such as an employee termination process and an unemployment claim response plan. If you need help creating or enacting these plans, assistance with an unemployment claim appeal, or with any other employment law matter, contact Simon Paschal PLLC.