by CCG Staff
Unemployment Denial:
What the Law Says
By CCG Staff
This information is provided for educational purposes only. Reader retains full responsibility for the use of the information contained herein.
The Federal government pays out billions of dollars each year in unemployment insurance. During the early months of the coronavirus pandemic, in 2020, this number rose to nearly $23.73 billion[1]. In times like the 2012 recession, it was even higher, near $100 billion. When employees leave a company and file a claim for unemployment benefits, that employer’s unemployment tax rate increases. So even though employers do not directly pay a former employee’s benefit checks, he or she pays more and more into the system each time a former employee wins an unemployment claim.
Unemployment compensation (UC) laws vary from state to state, but in many states, these laws provide opportunities for employers to contest a former employee’s claim. If an employee is let go due to intoxication, failing a drug test, or refusing a routine drug test, this is often grounds to deny a claim; however, an employer must be aware of the UC laws in his or her state and be ready to show evidence of misconduct on the part of the employee. This is where drug testing comes into play.
A considerable number of states will allow an employer to deny UC claims if the individual in question was discharged for failing a drug test that followed the state’s voluntary drug testing law. This increases the incentives for employers to make sure their drug testing policies are compliant with state laws, even in voluntary states. This is the case in Arizona where the voluntary law provides limited legal protection to compliant employers. Its law may not seem as enticing as others because it does not provide a workers’ compensation premium discount, but when coupled with UC denial and lower unemployment tax rates, this particular voluntary statute seems more attractive.
This applies and goes even further in states such as Georgia. In Georgia, employers that follow the voluntary law receive a workers’ compensation premium discount. Additionally, they benefit from a lower unemployment tax rate for denying UC claims. They even save money on workers’ compensation (WC) payouts because both UC and WC laws require compliance with the voluntary law. In such states, knowing the law and how it can benefit an employer adds up to considerable money saved and a maximized return on investment.
There are other states, such as Missouri and Texas, where there is no general state drug testing statute, but UC law provides extensive drug testing requirements. Complying with the UC law not only has the potential benefit of lower unemployment taxes but can simplify the policy creation process for an employer not knowing where to begin.
In all cases, employers benefit from knowing what the applicable laws say in their states. Business owners should contact drug testing experts when crafting a policy to ensure they are getting the most out of their investment, both in the business as a whole and in their drug testing program.
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[1] https://www.statista.com/statistics/284857/total-unemployment-benefits-paid-in-the-us/#:~:text=In%20September%202023%2C%202.21%20billion,impact%20of%20the%20coronavirus%20pandemic. Pulled 10/30/23.
