An Employer Roadmap to Getting through the State of Michigan Unemployment Compensation Maze

Whether you are a small, medium or large sized business owner or human resources professional, working your way through the State of Michigan unemployment process can be daunting at best. The fact that the state recently shortened the name of its agency from the Michigan Employment Security Commission to the less unwieldy Unemployment Insurance Agency (UIA) has done nothing to simplify the process of dealing with former employees who apply for unemployment compensation.

Employers, should verify the employee (claimant) worked for your company in the 18 months prior to the date of the Monetary Determination. Additionally, employers should review whether the reason given for the employment separation is indeed accurate as well as the wages shown. A Reference Code on the Monetary Determination may tell the employer that the employer will be asked for information about the employee’s separation from employment. If the employer is not requested to provide that information by a separate mailing, then responding to the Monetary Determination is your only opportunity to explain to the UIA the reasons the worker is no longer employed before they begin receiving benefits. Most importantly, the employer should determine the reasons for termination and whether the employment was terminated by a voluntary quit or a firing, or layoff from service, which greatly affects whether the employee is indeed qualified to receive employment compensation benefits.

The UIA will issue a decision called a “Determination”. If the employer disagrees with the UIA’s conclusion in the matter, the employer can file a response leading to a second UIA opinion called a “Redetermination”. If you disagree with the second opinion, you can then file a protest and ask for a hearing before an Administrative Law Judge, who will take testimony and consider legal argument and permit presentation of a legal brief. This, obviously, is a good time to engage counsel to help you craft and submit this argument.

The Michigan statutes below should help you craft your response and determine your standing and unemployment responsibilities.

Section 29(1)(b) of the Michigan Employment Security Act provides:
“An individual is disqualified from receiving benefits if he or she was suspended or discharged for misconduct connected with the individual’s work or for intoxication while at work.”
“Misconduct” is not defined in the statute, but the courts have defined the term. Generally, in the state of Michigan, the term “misconduct” is limited to:

“Conduct evidencing such willful and wanton disregard of an employer’s interest as is found in deliberate violations or disregard of standards of behavior, which the employer has the right to expect in his employee, or in the carelessness or negligence of such degree or reoccurrence as to manifest equal culpability (fault), wrongful intent or evil design, or to show an intentional and substantial disregard of the employer’s interest, or the employee’s duties and obligations to his employer.” Carter v Michigan Employment Security Commission, 364 Mich 538 (1961), adopting the reasoning and definition of a Wisconsin court.

The decision has been interpreted to mean that casual, non-repeated mistakes, usual and typical of employees of like experience, age and maturity, while not excusable, nonetheless qualify the employee for employment compensation when terminated by the employer for such acts of inadvertence or occasional lapse of memory, judgment, demeanor or proficiency.

However, behavior that draws from an employee’s intentional conduct, such as reckless behavior or disregard for the employer’s welfare, does constitute misconduct sufficient enough to keep the employee from receiving unemployment compensation after discharge.

The employer must be very careful that a response to the UIA is objective and truthful, so as not to be overly generous to a separated employee, because any admission by the employer in response to the UIA can be used against that employer in a separate lawsuit that might brought in regards to possible age and/or wage discrimination, sexual harassment or discrimination, handicap or a disabilities claim.

The Michigan Employment Security Act is complex and has many provisions, but the disqualification section is cited as Michigan Compiled Laws (MCL) 421.29 and the subject regarding employee misconduct is in Section 1(b). Again, we strongly advise you consult with experienced employment counsel to help you successfully make your way through this process, limiting any excessive potential revenue loss your company may experience as a result of not fully understanding your role and responsibilities in this complicated Michigan unemployment process.

Former employees filing for unemployment compensation benefits must first file a claim with the UIA, resulting in a notification of the potential charge to the employer’s account on a document called “Monetary Determination.”