If you fire or lay off an employee, or if a worker quits, you may be faced with a claim for unemployment benefits. Unemployment benefits are designed for people who lose their jobs due to no fault of their own, such as those who are laid off because an employer doesn’t have enough work for them. When a worker clearly deserves unemployment benefits, there’s no point in racking up legal fees trying to contest a claim. However, if an employee quits to start his or her own business, or you fire someone for stealing, coming to work intoxicated or excessive absences, you may want to defend the claim. Contesting a claim can pay off because your state unemployment tax rate goes up in direct relation to the number of former employees who are collecting unemployment from you. In addition, if you contest a claim and win, it may discourage workers from filing a wrongful termination lawsuit. Workers can be disqualified for unemployment benefits if they: Were fired for misconduct. Quit without good cause. Turn down a suitable job offer during the unemployment period. Are participating in a strike or work stoppage caused by a labor dispute. Are receiving Social Security benefits, severance pay, workers’ compensation payments or a private pension. Have made false claims or omitted information on their unemployment claim. Gather documentation Whenever an employee quits or is fired, gather all records that may influence an unemployment claim. For employees who are fired for misconduct, documents should include written records of warnings and progressive disciplinary actions taken. If there are any witnesses to the employee’s actions that led to the termination, get written statements from them. Fill out the employer notification form When a worker makes an unemployment claim, your state unemployment agency will send you an official form to complete. Typical information you’ll need to provide includes the employee’s length of employment with your company, annual wages and whether the employee quit voluntarily or was fired. If an employee was fired, you’ll need to explain the reasons for the termination. Fill out the form and return it by the deadline or ask for an extension. If you miss the deadline, chances are the employee will automatically be awarded unemployment benefits. U.S. Department of Labor Web site. View a sample Notice of Unemployment Insurance Claim Filed (DE 1101CZ) from California. Go to hearings If there are any hearings scheduled before the state unemployment agency, it’s a good idea to attend. Be prepared to present your case and bring any documentation to support your case. You aren’t required to be represented by an attorney at such hearings, but it may be a good idea if the amount of money you stand to pay out for the potential claim and resulting tax hike is substantial. U.S. Department of Labor Web site. File an appeal If you lose the case following a hearing, file an appeal with the unemployment agency. You’ll likely need an attorney who practices employment law to assist you with the appeal process. state agency for appeal forms. For examples, download the Employment Development Department Appeal Form (DE 1000M) for the State of California or view the Unemployment Compensation Appeal for the State of Florida.