Benefit Appeal: People denied unemployment payments fight for them because of tough job market

When Jason Smith was fired from his job as a graphic designer earlier this year, he did what some might consider unusual: He filed for unemployment benefits.

And when the Employment Security Commission denied his claim, Smith did something almost unheard of a few years ago. He hired a lawyer to take on his former boss for his weekly $371 benefits check.

"I felt wrongly fired," Smith said. "I fight for the things I think I deserve."

With the state's unemployment rate at 10.8 percent, the scarcity of jobs is stiffening the resolve of the unemployed to collect their benefits -- even when they've been fired. At the same time, many employers are just as determined to block the benefits because the payouts can increase a company's costs.

So far this year, more than 54,000 benefits appeals have been filed. At that rate, David Clegg, the commission's deputy chairman and chief operating officer, expects that appeals will set a record this year. To handle the crush, the ESC this year has added 87 officials to handle initial claims and appeals.

"In times of economic recession, people will have a greater incentive to appeal, when in normal circumstances they'd rather get a job and move on," Clegg said. "Historically there's not been enough money in it. Now you're looking at claims amounts that are quite sizable."

As far as financial incentives go, the past year has been a game-changer: Congress just extended the number of months a person can get unemployment benefits by another 20 weeks for states where unemployment rates are above 8.5 percent, such as North Carolina.

The extension, the fourth this year, increases the maximum benefit from $13,130 over about 26 weeks to about $45,000 over 99 weeks. Many people who now collect benefits in North Carolina will qualify for the extension.

The function of the benefits is to stabilize the state's economy, Clegg said. The ultimate beneficiaries are the stores and businesses where the unemployment benefits are spent.

So for someone to lose out on jobless benefits in North Carolina, it takes more than getting fired, Clegg said. A company has to prove that the worker was fired for fraud, misconduct or gross negligence. Workers who quit can also qualify for benefits if they can show extenuating circumstances, such as burdensome work schedules or overwhelming tasks.

"It's not a feel-good issue," Clegg said. "The law says individuals who are unemployed through no fault of their own should receive transitional benefits."

In cases where a worker bore "substantial fault" for his or her dismissal, the ESC has the option of awarding unemployment benefits without charging the company. The ESC can award partial benefits to the applicant by limiting the benefits period and not allowing extensions.

That's what happened to Annie Parker, 63, a nurse who worked four years at Brian Center Health and Rehabilitation in Durham. She was fired in 2008 after signing the wrong sheet that recorded drugs to be dispensed to patients. Parker lost in the first round. On appeal, the ESC hearing officer concluded the mistake was serious but did not rise to the level of misconduct. She won $494 a week for up to 22 weeks.

The more a business burdens the system by putting people on unemployment benefits, the more that business has to contribute to the benefits pool. Conversely, companies whose former workers don't collect state unemployment benefits have reduced payments over time, in some cases down to zero.

Companies that have large or repeated layoffs can be charged as much as 5.7 percent of the first $19,800 a year paid to each employee. A large company with several thousand workers could end up owing several million dollars a year if it pays the maximum rate. For smaller businesses, even one or two people collecting benefits can hurt the bottom line.

Fayetteville lawyer Sharon Keyes fired a paralegal after just eight days on the job because she wasn't qualified. When the paralegal filed a claim for $197 a week in benefits, Keyes tried to block it, arguing that as a small-business owner she should be able to decide whom to hire and whom to fire.

The ESC disagreed and ruled in the former paralegal's favor three times before Keyes finally gave up last year.

Of course, the commission can just as easily side with the former employer and deny benefits.

INC Research in Raleigh, which does testing for pharmaceutical companies, won after it denied benefits to a former project research associate who had been fired for bringing her sister to work. Similarly, an office manager at Carolina Medicorp Enterprises in Winston-Salem, who quit after failing to comply with a performance-improvement plan, had her claim denied on appeal.

Usually an unprepared worker is no match for an experienced corporate human-resources department in a legal proceeding at the commission, said Monica Wilson, a Durham lawyer who used to work as an ESC hearing officer.