Does Applying for Unemployment Affect the Employer in California?


California unemployment benefits are to help those unemployed through no fault of their own make ends meet while looking for new employment. From the perspective of the employer, an unemployment claim can increase the company’s payroll tax rate. It’s important that you appeal any unemployment claim filed against you that you think is without merit to avoid increased tax payments.

Effect of Claims on Employers

Most claimants think that when an employer’s former employee receive unemployment benefits, the employer has to start paying for those benefits. This isn’t true. California employers pay payroll taxes on the money they pay their current employees each quarter to be help fund the state’s unemployment insurance program. However, the tax rate is affected by the number of former employees collecting benefits. The more former employees you have collecting unemployment benefits, the higher your tax rate goes.

Ineligible Job Separation

There are numerous eligibility requirements for a claimant to receive California unemployment payments. However, the only one that involves a former employer is the job separation reason. If your employee left voluntarily without cause or your you fired the employee for just cause, he’s not eligible for unemployment. You can use this as a reason to appeal the claim.

Appealing a Claim

The Employment Development Department (EDD) will notify you if one of your former employees receives approval for unemployment benefits. At that point you have 20 days from the date on the notice to appeal the decision and request a hearing using the appeal form (see Resources). After receiving your request, the EDD sets up a hearing and notifies both parties. You can request to attend the hearing over the phone if you can’t attend on the set date and time.

Evidence Tips

When you attend the appeal hearing, you need to bring evidence with you. Evidence can be any compelling proof that your former employee’s job separation doesn’t qualify for unemployment. For example, if you fired the employee, you need to bring the employee’s record where you documented your problems with him and a copy of any parting paperwork you gave him. On the other hand, if the employee voluntarily left without cause, you might bring in notarized witness statements of coworkers who were there when he left.

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