Guiding Small Business Through Unemployment Benefit Claims

Date: March 06, 2024

Tips for small business owners to protect themselves from fraudulent unemployment benefit claims

As a small business owner, terminating an employee can be stressful. It could be because of budget cuts, downsizing, performance, or other reasons. In any case, the employee may be able to file for unemployment benefits that can increase unemployment insurance premiums. The NFIB Legal Center wrote a blog post that discusses how this process unfolds, as well as what employers need to know to protect themselves from fraudulent claims to protect their bottom line.    

Filing a Claim 

Once an employee is terminated, they must determine if they are eligible for unemployment benefits, which vary by state. Requirements include being laid off, terminated without cause, or other reasons that do not include severe misconduct or voluntarily quitting.  

The formerly employed individual will need to file a claim with the appropriate government agency online or by phone. The claim includes information such as personal details, employment history, and reason for termination. The employer may even be contacted to confirm the reason for termination.  Claims are then calculated and sent via direct deposit or a pre-paid debit card if claims are filed weekly. 

Requirements for Collecting Unemployment 

Individuals collecting unemployment must actively seek employment and report their efforts to the state unemployment agency. Failure to do so will result in benefits being stripped. Benefits will also only be available for a short time but can be extended due to high periods of unemployment or economic decline.  

Preventing Fraudulent Claims 

There are four steps employers can take to mitigate the risk of former employees obtaining unemployment benefits after they were terminated for misconduct or for voluntarily quitting.  

  1. Have a Paper Trail – Maintain documentation of the employee’s misconduct before termination. 
  2. Assert Company Policies – Ensure your employees understand the expectations of their job and what constitutes misconduct. 
  3. Respond Swiftly to Claims – If a former employee does wrongfully file for unemployment, it is crucial to respond promptly to any information requests from the state agency. Make sure the information is complete and accurate. 
  4. Consult with Legal Counsel – Consult a labor attorney licensed in your state regarding unemployment benefits.


Taking these proactive steps can help minimize the risk of having to refute or deal with false unemployment benefits claims in the future. 

Questions regarding terminating an employee and unemployment benefits claims can be asked via email to [email protected]. For more information on this and other subjects, visit NFIB’s Legal Center blog.

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