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Thursday, April 10, 2014

Alabama Unemployment Compensation Process Has New Teeth

By Tommy Eden

Under the strengthened Alabama Unemployment Compensation Act, an employer who fails to respond to an Alabama Department of Labor claims examiner’s request for information, or an employee who waves off a referee hearing, may be making a big mistake. In 2013, Alabama adopted an amendment to the Alabama Unemployment Insurance (UC) Act to improve the integrity of the system by ensuring that only those individuals who are entitled to benefits receive them

In the past, many Alabama employers chose not to contest UC claims and did not respond. This often allowed individuals who were not actually eligible to receive "overpayments." If an Alabama employer establishes a pattern of failing to timely or adequately respond to a requests from the Alabama Department of Labor (ALDOL) for information as to a claimant's eligibility, the employer's account will be charged for the benefits even if the claimant is eventually disqualified. 

On the flip side, a former employee who fails to appear for their unemployment benefits hearing can end up with a referee ruling which can serve to bar claims under other discrimination statutes. Recently, an ALDOL referee determined that Indian Rivers Mental Health Center had a legitimate disqualifying reason for discharging employee Terri Franks after she failed to appear at the telephone hearing. Franks later filed a claim of interference and retaliatory discharge under the Family and Medical Leave Act (FMLA) only to see her case dismissed by a Birmingham Federal District Judge Sharon Blackburn who held that the “dishonest conduct” unemployment agency ruling “collateral estopped” (i.e. blocked) Frank’s FMLA suit and awarded summary judgment to Indian Rivers. Franks v. Indian Rivers Mental Health Ctr.  The wording of the referee’s determination in this case was critical. 

Common Sense Counsel: Win the Alabama Unemployment Compensation referee’s ruling and most often you have won the first post-discharge skirmish with the former employee. The lesson is that Alabama employers should go all out to win the referee hearing with all first-hand witnesses and documents ready to present. When you tell an employee “your fired,” make sure you have all your ducks in a row and can demonstrate on paper and with testimonial evidence that a just cause UC disqualifying termination occurred.  

Judge Blackburn’s well drafted decision creates a real incentive for Alabama employers to get fit to win the Unemployment Compensation case  as it may allow your attorney to drive a legal stake thought the heart of most subsequent discrimination or retaliation claims. But this ruling is a two edged sword for the unprepared employer. If the employer elects not to attend the telephone hearing, but the former employee appears, gives testimony, and submits evidence, the employer may find itself without a viable defense later when the former employee’s discrimination or retaliation claim goes to court. Or when the employer elects not to appeal a misguided clearly wrong referee decision. Attending an Alabama UC Bootcamp Session now will help an employer get fit to win and use these new UC teeth to your advantage! 

Tommy Eden is a partner working out of the Constangy, Brooks & Smith, LLP offices in Opelika, AL and West Point, GA and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at or 334-246-2901.