Understanding unemployment insurance and the EDD

Unemployment Insurance is paid both by the employee and the employer. It’s the law. Unemployment insurance helps workers who have lost their job and aren’t able to work, bring home a steady income. Employees who meet the eligibility requirements can greatly benefit from this program. Requirements state that employees should be totally or partially unemployed, available for work, physically able to work, and actively looking for work, amongst other criteria.

California is a very “Employee Friendly” state – Unless the employee has egregiously violated significant policies, the burden of proof will remain on the employer. Employees can file a claim for unemployment benefits and many (or most) who do, are likely to qualify. Employers must show evidence, that an employee was terminated due to negligent acts or that they violated a company policy. Workers should be aware of what rules and policies are enforced in the workplace so they can work towards meeting those expectations.

Make sure you document in form of “progressive discipline,” any coaching you give to your employees for performance below standards. Employers can use well-documented proof to demonstrate that their employee was rightfully terminated due to misconduct at work. Through documented progressive discipline, employers typically terminate employees as a last resort when all other steps have been utilized (verbal warning, written warning, suspension, etc.). By keeping written records of all meetings and performance coaching with your employee, employers will have written evidence, in order to dispute the claim, and have backup documentation to share with the Judge, at the Hearing. Hearings are typically held at the Employment Development Department (EDD).

Typically, if you lay off an employee for economic reasons, or because of an elimination of position, the employee will be automatically eligible for unemployment benefits. Involuntary termination warrants eligibility for unemployment benefits. Employees may be granted on average 36% of their weekly wage if they qualify for unemployment insurance. These monies are paid by your EDD reserve account as well as by the taxes withheld on the employees’ paycheck.

Make sure that when terminating an employee, you provide them with all of the required documentation. It’s the law! During any termination process (voluntary or involuntary), employers must let their employees know that they are eligible to apply for unemployment benefits. Provide the terminated employee with 1. The Final Paycheck with all hours worked through the last day (required) 2. Any earned or accrued vacation time if your company provides this benefit (required) 3. A completed Change in Relationship Status Form (required) and 4. The Unemployment Brochure (required) which can be obtained online at www.edd.ca.gov. An additional HR best practice termination document is the Exit Checklist.

For more information, please do not hesitate to contact us directly at info@executivehrconsulting.com.