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What Defenses can Employers Use Regarding Unemployment Claims?

Upon termination of employment, an employee will most likely file for unemployment insurance compensation. The Pennsylvania Unemployment Compensation department will review each claim to determine eligibility. Upon evaluation, the department will send copies of its determination to both the former employee and employer. At this time, either party may appeal the decision.  Appeals can be filed via regular mail, fax, and/or the internet.  When filing an appeal, it is important to note that it is time sensitive and will generally allow only 15 days for the appeal to be filed, which may be reduced further depending on how quickly you receive the notification/determination.

Unemployment insurance is a means to provide temporary income to workers who experienced job loss through no fault of their own. The source of the benefit is based on the taxes imposed on employers to cover the cost of compensation.  States levy taxes on employers for unemployment compensation. An employer’s tax rate increases as the number of former employees receiving benefits increases. The experience rating affects employer’s tax liability; therefore, employers should carefully consider every claim for unemployment benefits for legitimacy.

Factors that Evaluate Whether a Claim is Warranted

Employees are not allowed to claim unemployment insurance if they leave the employment voluntarily or if they were at-fault. However, these rules have exceptions and nuances that should be considered.

Employee voluntarily left the job. When an employer gives an employee a choice between resigning or being fired, such a situation is considered a forced resignation. Also, if an employee quits because he or she was compelled to do so due to an employer’s illegal acts, their resignation is not voluntary. Additionally, an employee may have good cause to quit, which could involve disability or relocation. These circumstances may also not be considered voluntary.

Employee Misconduct. Employers can challenge an unemployment claim if it involves employee misconduct, such as:

  • Violation of company policies or rules. An employee’s violation of company policies or rules was intentional.
  • Excessive absenteeism or tardiness. An employer may not have a strong case if the employee’s absence was due to illness or disability.
  • Failure to follow instructions. An employer may not have a strong case if an employee’s failure is attributable to unclear, unreasonable, or unjustifiable instructions by the employer.
  • Failure to perform a job according to normal standards. An employer would have a strong case against an employee if their conduct was egregious and did not conform to reasonable standards, such as lying, stealing, abusing, fighting, coming to work under the influence of alcohol or drugs, or sleeping on the job.

Preparing for the Appeal

Once the appeal is filed, it may take several weeks for a hearing to be scheduled with a Pennsylvania Unemployment Compensation Referee.  During the ongoing COVID-19 pandemic, all hearings are presently held via conference call.  The Referee’s office will send detailed instructions for the hearing along with the notification.  Once you receive notice of the hearing date, it is important to note that any documents you intend to use to support your case must be email to the Referee’s office at least five (5) days prior to the hearing.  The Referees are strict and will not allow a party to use documents submitted within five (5) days of the hearing. 

In preparing for the hearing, employers should review every unemployment claim filed by former employers to determine if the claim is legitimate, which includes verifying employee information. Temporary staff and independent contractors are not eligible. For independent contractors, you should be prepared to demonstrate how the contractor was free from your direction and control, and how he or she held themselves out as an independent contractor in an independently established trade, custom or practice.  It is also necessary to verify whether the employee has been with the employer long enough to qualify. If their status changed from full-time to part-time and their wages were reduced, they may be able to seek benefits.

Additionally, employers should verify information regarding the employee’s income, dates of employment, and vacation pay information for accuracy.  Employers should also gather employee records, such as resignation letters, attendance records, termination records, and disciplinary actions or other documentation that proves employee misconduct. Employers may also have to identify witnesses to prepare for the appeal and hearing.

Finally, with regard to an independent contractor, other documents to consider submitting for the hearing include any contracts/agreements, W-9, 1099, insurance information, and any other document demonstrating the relationship between the parties.

The legal team at MacMain, Connell & Leinhauser provides legal services geared to defending employers, including appeals of unemployment claims. For an initial consultation, contact us online or call us at 484-318-7106.  Located in West Chester, Pennsylvania, we serve clients throughout Philadelphia, Chester County, and New Jersey.

How Can I Avoid Breach of Fiduciary Duty?

Fiduciary duty is legalese for certain duties owed by two or more persons who are party to a legal relationship. Doctors, real estate agents, attorneys, business partners, corporate officers, and board members typically have fiduciary duties toward their clients, partnerships, and corporations. In these relationships, the fiduciary is the individual who acts in the best interest of the principal or beneficiary.

In a doctor-patient relationship, the doctor is the fiduciary and must act in the best interests of the patient. Similarly, directors of a corporation are fiduciaries and must act in the best interest of the corporation. State and federal laws can also define fiduciary duties for specific relationships. The following are different types of fiduciary duties:

Duty of loyalty. This duty requires the fiduciary to be loyal to the beneficiary of the relationship. This means they must act in the best interests of the beneficiary without self-dealing or toward a personal benefit in conflict.

Duty of care. This duty requires the fiduciary to meet the standard of care set for their profession and perform their duties in a reasonably prudent manner. One must also ensure that they actively participate in making careful and informed decisions.

Duty of honesty. A duty of honesty requires the fiduciary to be completely honest and fully disclose any conflicts of interest. For example, a real estate agent has a duty to loyally represent the client in a real estate transaction and should not self-deal or have a conflict of interest. In a scenario where there may be a conflict because the agent represents both the buyer and seller, the agent should fully disclose the conflicting relationship and obtain consent for moving forward with the relationship from both parties.

Duty to Act in Good Faith and Fair Dealing. This duty requires that neither party will act in a manner to prevent the other party from receiving the benefits of the contract. This duty requires that both parties do everything expected of them in the relationship and the contract to accomplish its purpose. This duty also prevents parties from interfering with others’ performances.

How to Prevent Breach of Fiduciary Duty

Breach occurs when the fiduciary fails to uphold the obligations of the implied or enumerated duties, such as a breach of trust, failure to uphold financial obligations, or act in the best interests of the beneficiary. The party accusing the breach must prove that a fiduciary duty existed and that it was breached. The best way to prevent breach of fiduciary duty is to make sure there are company-wide policies regarding fiduciary duties and no tolerance for violations and self-dealing. It is also important to create best practices to prevent violations. The following suggested practices may minimize the risk of such violations:

  • Ensure that one is aware of their duties and obligations in the relationship.
  • If there are any issues in the relationship, address them immediately.
  • Avoid conflicts of interests and the appearance of impropriety.
  • Document all actions and decisions taken in the course of the relationship so that any doubts about the standard of care provided can be evaluated thoroughly.

Consequences of a Breach and Defense

When fiduciary duties are breached, legal actions may follow. The fiduciary may have to step down from their role in the company or business and pay monetary damages. Professionals, such as doctors and lawyers, may risk losing their license to practice. A common defense for those facing legal action based on breach of fiduciary is the business judgement rule that protects fiduciaries from legal action when their actions indicate that they acted with due diligence and reasonableness.

The legal team at MacMain, Connell & Leinhauser helps clients involved in conflict of interest and breach of fiduciary duties. For cost-effective and forceful representation, please contact us online or call 484-318-7106 for an initial consultation. Located in West Chester, Pennsylvania, we serve clients throughout Philadelphia, Chester County, and New Jersey.

Common Hurdles Faced by Small Business Owners

Small business ownership is risky as many small businesses fail. Knowing what hurdles to overcome and understanding common pitfalls can help owners avoid any negative consequences and ultimately help them flourish. The following are common hurdles that small business owners potentially face when maintaining their business:

Capital

A business needs initial capital to get started, as well as a constant cash flow to continue operations. Sometimes, unforeseen circumstances, such as the current pandemic, can create a shortage of capital. Small business owners need to have contingency plans in place for generating cash to keep their businesses going. It is important to keep in mind that a large initial investment may not always be a good idea, as this may lead to mismanagement of funds and waste. Keeping operations lean may be a good way to minimize waste and focus on the main business goals.

Nevertheless, no matter how lean operations are, emergency situations and unforeseen circumstances are part of owning a business. Sometimes, the sudden need for cash arises. If a business owner is unable to secure funding in a timely manner, they risk losing the business. Business owners must utilize all means of securing capital and explore alternative methods of doing so, such as crowdsourcing. Lately, crowdsourcing apps and other fundraising platforms on social media sites have increased; other potential sources include grants from various organizations, local governments, and entities designed to serve small business owners.

Customers

A business cannot grow without customers. It is important to provide products and services that are of highest quality that meet and exceed standards. Customer reviews can generate new customers and utilization of social media outlets can be a cost-effective method of generating additional business. Other avenues for reaching new customers include using social media advertisements on Facebook and Google. Once customers purchase a product or service, a business can save costs by converting them into a long-term purchaser and building their brand loyalty. This can be achieved by providing rewards, membership benefits, and premium services.

Employees

For a business to succeed, it needs workers that are skilled and customer conscious. A business owner should provide leadership and strive to create a positive work environment that prevents a toxic work culture through policies that are equitable, and merit based. By offering competitive salaries and benefits, owners can ensure employee loyalty, retention, and a good work ethic.

Accounts Receivable

Having an organized manner of accounting of all company financials is of utmost importance to monitor a company’s financial health. Utilizing invoicing and accounting software to keep track of payments and disbursements can provide a seamless way of tracking outstanding revenue. Furthermore, accounting software can increase awareness of company expenses so that actions can be taken to minimize wasteful practices.

Compliance

Owners must comply with federal and state regulations regarding employment and other taxation. Misclassification of employees or harassment complaints can lead to fines and lawsuits. Owners will have to divert financial and time-management resources to fight these battles. It is crucial that owners know and understand regulations and have compliance practices in place.

Small business owners are most vulnerable in a crisis; if an owner is not disciplined with their finances, they may risk losing all their investments. The legal team at MacMain, Connell & Leinhauser aids on a wide range of services related to small businesses, including ongoing operations and day-to-day compliance requirements. For more information regarding these services, please contact us online or call us at 484-318-7106. Located in West Chester, Pennsylvania, we serve clients throughout Philadelphia, Chester County, and New Jersey.

Universities Face Lawsuits Concerning Tuition Payments Amid Pandemic

Various universities across the country are facing class action lawsuits amid the Coronavirus pandemic. Students claim that they are being unfairly burdened financially in response to the closures of on-campus learning. Many are seeking refunds for unused meal plans, dormitory services, and general loss of on-site learning. Class action lawsuits have been filed against public universities in Arizona, Michigan, Indiana, California, and Vermont. Private schools, such as Cornell University, Columbia University, and Drexel University, among others, are also facing such lawsuits.

The class action alleges that the universities breached their contracts to the students and have been unjustly enriched with tuition and room and board payments. Universities, in their defense, can argue that the pandemic has made it impracticable to keep campuses open and show that moving classes online has mitigated damages. They can also show that they are not unjustly enriched because they continue to pay faculty and staff during the pandemic.

When examining these issues, colleges and universities must remember that their relationship with the families enrolling is governed by contract law.  Formulating a well defined governing contract is essential to maintaining a good relationship with students and their families while also protecting the school. Many class action lawsuits do not identify the terms and conditions of a specific contract. Due to this, state law can be utilized to determine the existence of a contract between the university and student. Some states may find an in-fact contract between the university and student, while other states may find there was no contract. Once there is an established contract, there needs to be definite terms and conditions, such as:

Excuse of Contractual Performance. Traditional defenses in contract law excuse performance based on limited circumstances. Known as the force majeure clause, this governs how parties are expected to behave in case of unforeseen circumstances. The pandemic may qualify as an unforeseen circumstance provided it meets the definition of the term in the particular contract. Application of the force majeure clause may excuse the university from providing a particular service or allow it to modify the service provided.  However, many schools are reviewing their handbooks and enrollment agreements to ensure that they have an option where a force majeure event occurs.

Prohibition of Education Malpractice. Most jurisdictions across the nation are reluctant to second guess educators. If the lawsuit alleges that substitution to online education is inadequate, universities can argue that courts are prohibited from finding education malpractice in evaluating adequacy of a learning model and should defer to the institution’s determination regarding what the best method of educating is in a given circumstance.

Preclude Class Certification. In order to bring a class action lawsuit, plaintiffs must prove typicality of claims, as well as predominance of common issues. If the defense can show that the class lacks either typicality or predominance of issues, the class certification will fail. Large universities often have students taking courses on a variety of different curricula that may not meet the standards of typicality and predominance required.

The pandemic has challenged academic institutions to implement remote learning and adapt to unpredictability and dwindling revenues. The legal team at MacMain, Connell & Leinhauser represent colleges and universities navigating these unprecedented times and the challenges presented. For an initial consultation, please contact us at 484-318-7106 or contact us online. Located in West Chester, Pennsylvania, we address the needs of clients throughout Philadelphia, Chester County, and New Jersey.