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Thursday, February 12, 2009

This is what happens when you give corporations unfettered power
Posted by Jill | 6:32 AM
As companies lay off more workers, the aspect of layoffs that gets very little publicity is the fact that companies have to pay higher unemployment insurance rates to compensate the state system for layoffs.

So what's a money-hemorrhaging corporation to do to save these costs, especially one just trying to protect the jobs and "retention awards" of the very executives that ran the companies into the ground?

Easy: Fight the people you laid off and try to deny them unemployment compensation:
It's hard enough to lose a job. But for a growing proportion of U.S. workers, the troubles really set in when they apply for unemployment benefits.

More than a quarter of people applying for such claims have their rights to the benefit challenged as employers increasingly act to block payouts to former workers.

The proportion of claims disputed by former employers and state agencies has reached record levels in recent years, according to the Labor Department numbers tallied by the Urban Institute.

Under state and federal laws, employees who are fired for misbehavior or quit voluntarily are ineligible for unemployment compensation. When jobless claims are blocked, employers save money because their unemployment insurance rates are based on the amount of the benefits their workers collect.

As unemployment rolls swell in the recession, many workers seem surprised to find their benefits challenged, their former bosses providing testimony against them. On one recent morning in what amounts to one of Maryland's unemployment courts, employees and employers squared off at conference tables to rehash reports of bad customer service, anger management and absenteeism.

"I couldn't believe it," said Kenneth M. Brown, who lost his job as a hotel electrician in October.

He began collecting benefits of $380 a week but then discovered that his former employer, the owners of the Gaylord National Resort and Convention Center, were appealing to block his unemployment benefits. The hotel alleged that he had been fired for being deceptive with a supervisor.

"A big corporation like that. . . . It was hard enough to be terminated," he said. "But for them to try to take away the unemployment benefits -- I just thought that was heartless."

After a Post reporter turned up at the hearing, the hotel's representative withdrew the appeal and declined to comment. A hotel spokesperson later said the company does not comment on legal matters. Brown will continue to collect benefits, which he, his wife and three young children rely on to make monthly mortgage payments on their Upper Marlboro home.


This is why the compensation of top executives has become a huge issue. When times are good and everyone is sharing the wealth, no one cares about what executives are making. But when times are bad and everyone else is tightening their belts, the spectacle of corporations defend their executive compensation practices and bonus structures while denying laid-off workers $300 a week in unemployment just shows how rigged the game is.

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3 Comments:
Blogger Nan said...
Corporations, big and small, have been pulling this crap for years. I read somewhere years ago that barely 30% of the people who qualify for unemployment insurance payments ever actually received it, and I don't think anything's changed much. I've had to fight for it twice myself, and both times wondered about co-workers let go under similar circumstances who may have just quietly accepted the denial instead of asking for a review and/or hearing.

Anonymous Lynn said...
I laid off my assistant in December. She had been doing a lousy job and while I liked her, I could no longer justify keeping her after she made three huge mistakes that jeopardized my business. If she had been doing a good job, I would have kept her on.

When she filed for unemployment I thought about contesting it, but didn't. I wonder how many of these layoffs are due to poor performance and the slow economy gives employers a reason to terminate the employee. I'm not justifying all of this, but I have another perspective as an employer in the same situation.

Anonymous mandt said...
----As a community advocate, I can't tell you how many times low wage service workers have come to me in tears because small business owners fired their counter/cashier people and trumped up petty theft charges to avoid paying unemployment insurance. Its very common.