Employers allege wrongdoings against laid-off workers - but is motivation to illegally keep from paying unemployment taxes?

As if giving terminated employees a few minutes to collect personal effects under the watchful eye of a security guard and showing them the door with a week or two of severance isn't a humiliating enough, businesses are zeroing in on yet another indignity to cut costs during the Great Recession: falsely accusing laid-off workers of wrongdoing in an effort to stem employer-paid unemployment taxes.

In 2006-07, employers lodged about 306,000 accusations of misconduct against terminated employees, a number that soared 46% in 2008-09, to almost 447,000, according to data from the National Employment Law Project.

"The likelihood that the amount of misconduct would jump as the labor market worsened is extremely low," Bruce Nissen, director of research at Florida International University's Center for Labor Research and Studies, told Orlando Sentinel reporter Jim Stratton. "If anything, workers would be more likely to ‘toe the line' during times of high unemployment. "This is a way to reduce their costs."

Companies have good reason to limit the number of former workers filing unemployment benefits claims. Businesses pay state unemployment taxes based, in part, on how much their former employees collect over time. Workers fired for misconduct are ineligible for benefits and don't count as marks against businesses when states calculate new state unemployment contribution rates. So, alleging that an employee has committed wrongdoing can disqualifying them from receiving benefits and the company usually pays less in taxes.

Some researchers, however, told Stratton that assuming ill intent on the part of employers because of increasing misconduct allegations is spurious; the recent jump is tied to the sheer volume of claims, not to fraudulent employer claims. But others countered that misconduct firings should be driven by the size of the labor pool, not by recession-related layoffs. When viewed that way, there were about 17 misconduct objections for every 1,000 workers in Florida in 2006, a number that jumped to 33 in 2009, Stratton reported.


masqu3rade said...

I think it might have more to do with the cost cutting that was mentioned. In good times offenses that could or should have been filed as misconduct are let slide in the hopes that the employee will just leave without incident, while poor economic times require that every possible offense be submitted to reduce costs.

This same logic applies to an increased number of layoffs not just the size of the labor pool. As more employees are laid off the amount of unemployment insurance owed by a company will increase as well, so in good times a reduced number of layoffs means a couple extra former employees signed up under your unemployment insurance is an acceptable trade-off for the added probability that the employee leaves without incident. In poor times the escalating UI costs skew the risk-reward equation which forces companies to file more probable/borderline misconduct accusations in an effort to reduce costs.

Rebecca Theim said...

The Orlando Sentinel article actually addresses the issue of the increased pool of layoffs and whether it would drive the kind of increases states have seen.