[author: Ted Olsen]

Understandably, employers are upset when ex-employees fired for good cause - especially acts of misconduct - file unemployment compensation claims.  In most states, however, the unemployment insurance systems are not a "level playing field," but are intended and designed to provide benefits to claimants.  Moreover, the laws governing unemployment benefits awards often provide benefits to claimants who were fired for a host of "good" or "just" reasons.  For example, in many states, if a claimant can plausibly assert that she didn't know that her misconduct would result in dismissal, the claimant will be awarded benefits.  Another reason not to fight benefits claims is that an unemployment hearing on the record - with sworn testimony - can be a trap for an employer. 

A recent court decision has added to the list of factors an employer should consider when deciding whether to oppose an unemployment claim.  The mere act of opposing a claim may be deemed unlawful retaliation.  In Stezzi v Citizens Bank of Pennsylvania,[1] a bank fired an employee because a number of cash deposit bags containing money that were under her custody were lost.  Just cause for discharge, right?  Ms. Stezzi filed an EEOC charge, claiming race, sex and age discrimination.  Five days after the bank learned of the charge, it directed the company handling its unemployment claims, TALX, to appeal her claim for unemployment benefits on grounds that she was "discharged for gross negligence causing a financial loss to the employer."  No risk, right?  The bank had not even appeared at a hearing on the claim.  But the former employee was denied unemployment benefits as a result of TALX's submission. 

Later, when Ms. Stezzi filed her federal court lawsuit, she claimed that the bank's opposition to her unemployment claim was retaliation for her EEOC charge.  The bank moved to dismiss the retaliation claim, because the alleged retaliation occurred after her employment had ended.  The Court ruled against the bank. 

Of importance to the Court was the allegation that Ms. Stezzi had suffered an economic harm, i.e., loss of unemployment benefits, as a result of the bank's position.  Also significant to the Court was the allegation that the bank had characterized its reason for discharging her in an inflammatory fashion, "gross negligence causing a financial loss to the employer," a reason likely to harm her ability to obtain other employment.  Although the plaintiff could not honestly state that TALX's submission had been (or could or would be) seen by potential employers, the allegation that it might be seen by potential employers was also significant to the Court.