Why do employers fight unemployment compensation benefits?

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LawyersWill your employer contest your unemployment benefits? Here are several reasons employers will fight to see that you do not receive unemployment benefits and that you lose at your unemployment appeal hearing.

Unemployment Insurance Premiums

While the employer does not have to pay the unemployment benefits directly, successful claims mean that the employer will have to pay a higher premium. The employer is solely responsible for contributing to unemployment insurance; these costs cannot be passed on to workers. Because the cost of a single claim can have a significant impact on the employer’s experience — the number of claims it pays out each year — and a resulting effect on the bottom line, companies might decide to contest an employee’s claim for payment. Simply put, it makes financial sense for employers to oppose your benefits.

While substantial, cost alone may not be the only factor.

Employment Discrimination

If an employer has discriminated against you in some way, wrongfully terminated you, they will also fight your unemployment benefits. It is an unfortunate facet of our unemployment that an employee who has been wrongfully terminated now has to face their employer again to simply fight for their lifeline. This system is not employee friendly and often means that people face a second loss in addition to their job.

Lawsuit Prevention

We always advise that former employees who have a potential lawsuit vigorously pursue unemployment benefits. Accordingly, we always advise employers to vigorously fight when there is a possibility of an employment lawsuit. Many attorneys tend to think that unemployment compensation is a totally separate system. Unemployment lawyers know better. One of the first questions you are asked by the EEOC, PHRC, or CRC is the status of your unemployment compensation claim. Your eligibility is used as evidence of whether they should pursue discrimination claims.


More than you would imagine, we have seen a vengeful employer who simply did not like you, is a raging lunatic, or is truly out to harm you. In these cases, the employer often feels slighted and wants personal revenge. Unfortunately, the way the unemployment system is structured, they can use company resources to continually fight and appeal your unemployment benefits.


Sometimes, an employer will contest a claim because it’s the responsible thing to do. Unemployment insurance is provided for the benefit of legitimate claimants. Abuse of the system could threaten benefits for everyone. If employers are aware that an employee is not entitled to benefits, in many cases they are encouraged — even required — to fight the claim. Fraudulent claims can only be prevented with the active help of the employer. If the company knows the employee was discharged because of serious misconduct or is claiming benefits despite an offer of suitable work, the only way to challenge the behavior is by contesting unemployment benefits. In fact, the business could face consequences for not doing so.

Information Gathering

If the employer is concerned about a lawsuit from the employee, the unemployment insurance hearing might be a relatively low-risk way to find out more details about the worker’s complaints. In addition, winning the claim might demonstrate to the employee that the company was acting for legitimate business reasons and discourage further lawsuits.

Misconduct or Fraud

Employers know that when employees quit or are terminated for willful misconduct, they are usually ineligible for benefits. They will go to the unemployment compensation appeal hearing and do everything in their power to show that you quit or engaged in willful misconduct. It is a deterrent  to other workers.

When an employer sees an employee who they believe is fraudulently abusing the system, they will also contest benefits. This could even mean that after you use all your unemployment benefits your employer submits documentation that leads the UC Service Center to believe you had an overpayment.  Will you be in non-fault or fault overpayment if you are denied, quit, resigned, misrepresented or lied to get unemployment benefits?

Other Considerations

Before fighting an unemployment claim, the employer will consider all relevant factors. Sometimes, agreeing not to contest unemployment benefits in exchange for a settlement agreement with the employee — where the worker agrees not to pursue any other legal action, for example — can be a cost-effective outcome. Additionally, the high cost of time to process and contest unemployment insurance means employers will choose not to dispute the claim in certain circumstances.