Figures from the Connecticut Department of Labor show that employers rarely appeal an unemployment award, even if the employee quit voluntarily or was fired.
Those low figures may be due to very low expectations by the employers of having a successful appeal but the increased costs of unemployment insurance results in more costs to businesses and to customers.
Wendy Traub of Hemlock Directional Boring - a construction company that specializes in underground utility pipe installation, says small businesses like Hemlock simply do not have the time to commit to appeals when there is little chance of success - regardless of whether or not the employee quit, was fired or laid off.
“I would say 98 percent of the time - I don’t want to say it was a joke - but no matter what evidence we could present, the labor board said they are going to get it.”
Wendy’s husband, Ken, is the owner and operator of the company, working on site with his crew. Taking a day off to dispute an unemployment award can be costly for the business and due to prior experiences the Traubs began to gave up on the appeals process. “It became a question of how much time can he take, when he’s the company, to go do something like this?”
One of those experiences was a worker who quit mid-day on a job site, filed for unemployment and was approved despite Hemlock's appeal. Outside of office staff, Hemlock operates with a crew of four to five people, so one person walking off the job has serious consequences.
“The problem with unemployment is that even if they walk off the job they’ll put in some reason they walked off the job - hostile work environment or something like that - and we have no way to disclaim it.”
Construction businesses generally have the highest unemployment insurance costs due to the seasonal nature of the business. Employees are often laid off during winter months, collect unemployment insurance, and are then rehired in the spring.
Although Hemlock can and does operate during the winter months because they drill below the frost line, jobs are more scarce and so they lay off employees for a few weeks between December and January. “They usually collect unemployment for two or three weeks and then we call them back,” Traub said. “It’s just the nature of the business.”
Traub says one of difficulties faced by small business owners is having neither the time or the money to hire “intermediate” staff who can monitor employees, document problems and “file all those little pieces of paper that might help in a case.”
“We don’t have the time, nor do we have the money to hire intermediate staff to just watch people all day.”
Small businesses are defined as companies that employ fewer than 500 workers by the U.S. Small Business Administration. Of Connecticut businesses, 18 percent have between 1 and 19 employees, according to the SBA Office of Advocacy. Small construction firms accounted for 88.6 percent of all people employed in construction services in 2012.
A recent poll of Connecticut businesses by the Connecticut Business and Industry Association and BlumShapiro showed that 60 percent to businesses found state regulations “complex and vague and making the effort to understand them costs time and money.”
Traub says the rules surrounding unemployment insurance claims are too easily exploited through vague definitions of what constitutes a “hostile work environment.”
She also says that often employees won’t return to work until their benefits have expired, knowing that the construction industry has high employee turnover rates and jobs can be acquired quickly.
“I think there is some kind of message out there,” Traub said. “It used to be they would have to come in and have management sign things but now they find it easier to collect until time runs out and then they go look for work.”