New Tennessee Unemployment Law Goes Into Effect September 1

by Miller & Martin PLLC

There is some additional good news to share with employers – aside from the fact that you have Monday off for Labor Day!
Effective tomorrow, September 1, 2012, Tennessee’s unemployment compensation benefits law will be getting a MUCH-NEEDED facelift!
For any of you who have tried to contest unemployment benefits lately, you have probably learned the hard way that such challenges are often an up-hill battle. 
Like any law, this one will remain at the mercy of those at the initial hearing level to “interpret” as they see fit – until we can get some court precedent to cite at this level or on appeal with the Board of Review.
But, at least some relief has arrived.  The biggest help to employers will be the completely new definition of “misconduct.”  Specifically, in order to prove disqualifying “misconduct,” the employer can show any of the following:
  • Conscious disregard of the rights or interests of the employer (like those employees who  start their own competing company on your time/using your equipment!);
  • Deliberate violations or disregard of reasonable standards of behavior that the employer expects of its employees (“deliberate” will still require proof of notice of such standards);
  • Carelessness or neglect of such a degree or recurrence as to show an intentional or substantial disregard of the employer’s interest or to manifest equal culpability, wrongful intent or shows an intentional and substantial disregard of the employer’s interests or of the employee’s duties and obligations to the employer;
  • Deliberate disregard of a written attendance policy and the discharge is in compliance with such policy (can I get a HALLELUJAH on this one!!!!!!!!!!!!!) (the “deliberate” language here may still provide some wiggle room in the “my child was sick, my car broke down, etc., I couldn’t help it” situations);
  • A knowing violation of a regulation of this state by an employee of an employer licensed by this state, which violation would cause the employer to be sanctioned or have the employer’s license revoked or suspended by this state; or
  • A violation of an employer’s rule, unless the employee can demonstrate that he/she did not know, and could not reasonably know, of the rule’s requirements, or the rule is unlawful or not reasonably related to the job environment and performance.
Finally, all those “thou shalt not” provisions in your 70-page handbooks could pay off!
There are several other new eligibility requirements that terminated employees must meet in order to continue receiving unemployment benefits.  Things like “not being in jail during a week such benefits are paid out” and providing detailed information about their contact with at least three (3) employers per week or accessing services at a Tennessee DOL Career Center.  Providing false information will result in disqualification for a minimum of eight (8) weeks.  The TN DOL will be conducting random audits of 1,000 claimants per week to determine whether they are complying with the law.
After September 1, terminated employees will continue to be eligible for their full benefits for 13 weeks if they do not find a job making 100% of what they were making at their former job.  Past the 13-week mark, they will only remain eligible for benefits if they have not found a job making at least 75% of their former wages, up to week 25.  For weeks 26-38, the eligibility standard drops to 70%, then to 65% for all weeks following that.
Employers also will have the option of being proactive by going ahead and providing a statement to the TN DOL of “their side of the story” rather than waiting to file a response to the employee’s claim for benefits.
The new law also clarifies the interaction between severance and wages in lieu of notice payments by stating that employees are not eligible for unemployment benefits until such payments end (provided they involve what the employee would have made in his/her regular salary for the covered period).  [Make sure you do not violate the confidentiality provisions of your severance agreements by providing such information to the TN DOL though.]  It also provides that if an employee who was slated for lay off is offered other employment at the same rate of pay by the same employer and turns it down, he/she will not be eligible for benefits.  The same is true of an employee who is offered a new position which requires a drug test and the employee does not pass or refuses to take it.
Regarding the total amount of time for which terminated employees can continue to receive unemployment benefits, starting in September, this total will drop from 99 to 73 weeks.  At this point, the federal emergency unemployment fund is set to end as of December 31, 2012, such that as of January 1, 2013, unless these benefits are extended, terminated individuals will only be eligible for the normal 26 weeks of benefits under Tennessee state law.
Not to minimize any of the excitement you are feeling right now, but just a couple of cautionary practical notes regarding unemployment to close.
(1)  Most employees do not understand or appreciate the difference between “winning” an unemployment claim and “winning” a wrongful termination lawsuit.  (As Charlie Sheen would say – it’s all just “winning!”)  So, still give some very careful consideration as to whether or not you want to challenge your former employee’s ability to continue to put food on his or her table – as often unemployment claims are a “gateway” to other much more time-consuming and expensive ones.  Add to this the fact that a Legal Aid attorney or paralegal is available to assist the employee at the initial hearing if they cannot find a “friendly neighborhood plaintiffs’ lawyer” to do so – such that it will not just be a “mano-a-mano” fight between you and the employee. 
(2)   Your witnesses’ testimony at an unemployment hearing will be under oath, just like in court, and can be used against your company in later wrongful discharge suits, EEOC Charges, etc., as can any documentation you submit to the TN DOL as part of the unemployment contest and appeal process.
Accordingly, we strongly recommend discussing your decision to contest unemployment with an employment lawyer in order to get some context as to whether in the long-run this decision will truly be worth it or not.  Some hills are still worth dying on – especially (hopefully!) in light of the clearer and broader definition of “misconduct” described above.  But some are not.
We hope you have a great Labor Day Weekend!  And, as always, if we can be of assistance in analyzing your unemployment contest or other labor or employment law issue, please feel free to contact Stacie Caraway or any other member of our Labor & Employment law practice group.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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