Can Plumbing Contractors Control Unemployment Costs?

While no one can avoid claims, following best practices can help minimize them
Can Plumbing Contractors Control Unemployment Costs?
David Peasall

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Can you control unemployment costs? Although the short answer is “yes,” there’s a lot more to it than that. 

First, plumbing contractors must understand that no one can really avoid unemployment claims, because former employees are always free to file claims. However, astute contractors can minimize the number of claims and maximize their ability to defend themselves against claims that have been filed. And just as a side comment, the information we’re providing here applies across industry lines, although we’ve included examples specific to the plumbing industry.

Minimizing claims: best practices

            Unemployment claims are most frequently related to employee performance, attendance or conduct; and less frequently to layoffs or an employee’s hours being reduced.   

  • Performance issues, specific to the plumbing industry, relate to, for example, an inability to install or repair fixtures properly the first time, store inventory properly, keep the work area clean, read blueprints, properly diagnose problems, make water-tight connections and many other factors. 
  • Attendance issues include absence, frequent tardiness and unexplained periods off the jobsite. 
  • Conduct includes inability to work well with fellow employees, other workers on site and poor customer relations. 

Following are ways we suggest to minimize the number of claims:

  • It starts with the recruitment and hiring processes: Best practices call for the use of job descriptions to clarify the role (for example, will the worker be required to do new construction installation? Remodels? Commercial or residential sites?), written employment applications, structured interviews, background checks, drug screenings and past employment verification.  (Special Tip: The employment application and other related documents should state that employment is at-will, where states allow this). All these elements create an environment that results in hiring the best people, minimizing surprises and offering the job to a person who wants to stay. Satisfaction is a two-way street and you want the best employees to be with you long-term.
  • Have good policies and procedures in place: Make your expectations clear in terms of the quality and quantity of work to be performed, and document your expectations with written policies and procedures. These should be discussed as part of the onboarding process, as well as reviewed periodically, particularly with problem employees. It’s important to go beyond task-oriented procedures to include policies on time and attendance, leave, anti-discrimination, substance abuse and other important issues.
  • Provide consistent training: Owners and supervisors often assume employees have the proper skills and know what to do – the right way. However, procedures may vary widely from one contractor to another, leading to what may be honest mistakes on the part of a new worker who doesn’t understand how your firm does it. Part of a good training process is asking the worker to demonstrate your expectations, after giving them instruction, of the right way to install or repair fixtures. Finally, you and your supervisors should “inspect what you expect” to monitor worker performance and, if necessary, retrain the employee.
  • If you aren’t satisfied, let the employee go quickly, before the state’s probationary period expires: In most states, this is 90 days and an employer is generally excluded from unemployment claim liability if the termination occurs before that time. (Special Tip: Allow yourself 10-14 days in advance of the probationary end date as a decision-making buffer to allow for internal reviews.) Don’t forget documentation – even if the termination occurs within 90 days of the date of employment, you should still have ample documentation to support your decision in the event of litigation for wrongful termination. 
  • If problems pop up after 90 days, take necessary corrective actions and document them thoroughly: We prefer the term “corrective action” to the more commonly used “progressive discipline” because it indicates to the employee that you have the expectation of them fixing the problem, not punishing them into compliance or “building a case against them.”   The goal of any such program should always be to resolve the problem and maintain the relationship, thereby helping the employee become successful; rather than simply justifying a termination. Depending on the severity of the problem, corrective actions may start with simple coaching, followed by a sit-down conversation if the coaching didn’t resolve the issue, and, if the situation continues, a written warning. If termination is the next step, you should have a written record of all these steps, but you should also ensure that the employee understands why he/she is being terminated. If termination of employment is the necessary corrective step, the conversation should be reasonable, dispassionate and brief; there is no reason for it to be a harsh or lengthy conversation. (Special Tip: The goal of this conversation is to communicate that the employment relationship has ended and get the employee off the employer’s property safely, calmly and without incident.) 
  • Avoid layoffs: Watch your business model and plan ahead to reduce head count through attrition rather than layoffs.

Dealing effectively with unemployment claims

            Generally speaking, the burden of proof in the unemployment claims process falls on the employer, particularly if the employee’s claim relates to performance. It may be less likely for an employee to win a claim in the case of termination for conduct or attendance, particularly if you have ample documentation.

Following are ways to make your strongest case:

  • Monitor and adhere to timely response dates required by the state.
  • Provide substantiating documentation upfront with your initial response. Be aware that the state often must make their decision based on the preponderance of evidence. This means that to win a claim, you must show you made a good faith effort to train and communicate with the employee, explained procedures and expectations and that you have more credible testimony than the employee. 
  • First-hand testimony is critical. The person directly involved with the termination decision, whether it’s you or a supervisor, should be present at hearings. Additionally, witnesses who give first-hand testimony to the events are critical.
  • Maintain a calm and respectful demeanor during the hearing. 

In summary, the stakes can be high if you lose claims. Your rates, as determined by the state, may well be increased. However, rates will be subject to downward revision over time if claims are less frequent.  The best advice is to look to a trusted advisor who understands the regulations and processes in the state(s) in which you operate, as well as the best ways to minimize the likelihood of claims.

About the author: David Peasall, SPHR, is human resources director at FrankCrum, a national professional employer organization (PEO) that provides outsourced human resource services. He can be reached at davidp@frankcrum.com.



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