Fired Employees and Unemployment Claims


When an employee of your agency is terminated from federal employment, does your agency have a policy on whether to controvert a claim for unemployment benefits made by the terminated employee? Do you know the agency’s policy?

Frequently terminated federal employees file claims for unemployment benefits with state agencies. If you were the official responsible for the termination decision, human resources may ask you how you wish to respond to the claim.

Knowing how most state unemployment offices will process the claim is helpful to deciding how to respond, along with understanding the interplay between a state unemployment process and an employee’s Merit Systems Protection Board appeal of the removal action.

Most states have essentially the same eligibility standards. That is, if the employee was fired for cause, the employee is not eligible. For federal workers fired for unacceptable performance under Chapter 43, they would likely be eligible for benefits because termination due to poor performance in most jurisdictions does not equate to “cause.” So in this column, I’m focusing on federal employees terminated under Chapter 75, which is the federal “for cause” method of terminating a federal worker.

When an agency receives notice from the state unemployment office, the state agency is looking for information to determine whether the basis for removal disqualifies the claimant under the state’s eligibility requirements. Here, it’s not possible to evaluate whether every possible charge of misconduct under Chapter 75 would be disqualifying. So my first recommendation is that someone review the unemployment office’s statement of eligibility and disqualification. If you then understand what type of misconduct makes an employee non-eligible and you/the agency decide to controvert the claim so as to prevent the employee from obtaining benefits, then you will have to produce to the state agency evidence of the removal action and its basis.

In so doing, if the agency succeeds in getting the state agency to initially deny the claim, you should know that your former employee can seek a hearing before the state agency at which agency officials, including the official who decided the termination action, can be called as witnesses. You and your agency may or may not want to partake in that process. To avoid the hearing process, the agency simply would not
controvert the claim. That means, in all likelihood the employee’s claim for benefits will be granted.

So what if the same terminated employee also has a concurrent MSPB appeal pending on his or her termination and the state agency has granted the unemployment claim because the agency chose not to participate? MSPB precedent is that while unemployment compensation decisions are “worthy of consideration, they are not dispositive;” they are not binding on the MSPB, and they do not have the effect of collateral estoppel. Often the MSPB finds that the state decision granting unemployment benefits is “of little probative value” because the legal and evidentiary standard applied by the state to determine eligibility differs from that applicable to proving the charged misconduct at MSPB. In sum, no problem proving your case at MSPB if the former employee has also received state unemployment benefits.

My recommendation is to understand the state’s eligibility requirements, the state’s full process for adjudicating a claim, and whether the former employee has appealed to MPSB. Then you can decide how to proceed in either forum.


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