Unemployment From a Business Owner’s Perspective in California

NOTE: You can always fire an employee “at will.”  It’s just unemployment you have to be concerned about.

 

WHY YOU SHOULD CARE

If you didn’t already know, employers help pay a percentage of their payroll into the California Unemployment pool.  From that pool, ex-employees get their unemployment.  Unlike pregnancy leave, social security, and medicare, it’s the EMPLOYERS and not employees that end up paying into the unemployment pool.  So you have to be mindful that you’re not firing people like crazy unless you don’t care about paying larger sums of money into the unemployment pool.

The California Employment Development Department keeps track of what percent of your pool has been paid out, and the higher the ratio (more payouts) the higher amount of money you have to put back into the pool.

 

HOW EMPLOYEES GET UNEMPLOYMENT

If an employee leaves a job for any other reason EXCEPT for “willful misconduct” or quitting WITHOUT “good cause,” then they will most likely get unemployment.

 

BUT THEY QUIT THE JOB!

Even if an employee voluntarily quits, they can still get unemployment if the have a “good cause.”

Here are some more “good cause” reasons for people to quit:

http://www.edd.ca.gov/uibdg/Voluntary_Quit_VQ_500.htm

For example, I had an employee that voluntarily quit so that they could move out of state to take care of their ill child.  They got unemployment.

Or if you cut an employee’s rate of pay more than 20% and they quit, they will get unemployment!

 

HOW TO PROVE “WILLFUL MISCONDUCT”

The burden is on the employer to prove “willful misconduct” for why you fired an employee.  You want to have as much written records to support your claim.  I generally try and get 1 verbal warning, and two written/signed warnings within a relatively short period before terminating employment.

Even if they miss one day, it may not be enough to disqualify them from unemployment.

There was this instance where an employee was stealing checks for the last year they were working (story about that later), but I didn’t find out until AFTER they were terminated.  Even though I brought that up to the administrative judge’s attention, they still got unemployment!  The odds definitely are stacked in the employees’ favor.

To get more information on unemployment or before you decide to fire anyone, I recommend you read the information here to minimize your unemployment liability. http://www.edd.ca.gov/Unemployment/More_Employer_Information.htm

“Evergreen” Contracts and Contract Negotiation with Tellecommunications

I prefer month-to-month contracts as much as possible, especially in areas of technology.  This is to give me the freedom to cancel with the vendor in case they aren’t working out financially.  It’ll allow you to cancel after the month without any repercussions.  Perhaps you find someone cheaper or you may discover their services aren’t really needed.

Make sure you’re reviewing ALL contracts in the fine print and renegotiate the fine print.  If you don’t like it, walk away and check with a new company if many companies offer similar services.

Often contracts will have provisions that automatically renew the original term of the contract unless you cancel at least 90 days prior to the end of the term.  These are “evergreen” clauses and I HATE them.  Some contracts will even state you can’t cancel earlier than 180 days before the end of the term.  That means you only have a 90 day window to cancel a contract that may automatically renew another 5 years!!!

I will often try to do a standard term on the contract, and then once the term ends, have the contract month-to-month.  Or if it’s an evergreen contract, I will send them a cancellation letter the first month or as early as possible so that it’ll force them to come back to the table to renegotiate the terms at the end of the term, rather than automatically renewing.  You still need to be on the ball upon renewal time.

The most notorious companies are the ones that deal with technology.  Month-to-month is the way to go or at most an annual contract because technology and pricing is constantly shifting downward.  You have to be on the ball and paying attention to these because often times you have a small window to cancel.

Companies to consider: telephone, Internet, and television.  Or basically any company that you started services with more than 3 years ago.

I’ve saved hundreds of dollars per month by trimming bloated telecommunications contracts from 2004.

WARNING! Korean Phone Company Shadiness in Orange / Los Angeles County

http://youtu.be/r-YXHhr5F3Y

Here’s the email (December 31, 2009) summarizing the shadiness that I sent as a complaint to Mitel.  I had attachments for the contracts and bills, but I don’t think it’s necessary for you to get the moral of the story.

Hi [redacted] ,

I was told that you are the regional representative for the [redacted] owned by [redacted] .

I would like to report to you that we are currently in a dispute with [redacted]  stemming from his misrepresentation and fraud.  The leasing company, [Financial Company] has also been pulled into the issue.

Prior to meeting [redacted] , we had 18 phone lines through a T1 Data/Voice Intergrated Phone line through Telepacific with an older model Mitel SX-200 that uses a floppy drive to boot up.

Here is the timeline of what occurred:

November 2009

[redacted]  and representatives approached me and offered me a new Mitel SX200 ICP PBX telephone system and a T1 Dynamic Voice/Data service with equivalent service for a total monthly payment of $680.00 plus tax.  How he would do this exactly wasn’t clearly explained to me at the time.

December 3, 2009

The Mitel SX200 ICP PBX was installed without the T1 Dynamic Voice/Data Service.  They gave me a leasing agreement without any mention of the T1 Dynamic Voice/Data Service.  I told them I needed it on the contract and they added it at the last second.  I signed the lease agreement ([Financial Company].pdf) after they finished installation with the added line of the “T1 Dynamic/Voice Data Service.”

December 4, 2009

[redacted]  from [Financial Company] called me to confirm that the equipment was installed.  I notified her that the equipment was installed.  There was no mention of the T1 Dynamic Voice/Data Service not being provided.  [Financial Company] then disbursed payment to [redacted]  believing or not aware of the T1 Dynamic Voice/Data Service to not be a significant feature.

[redacted]  offered to replace the T1 for a much faster 10mbps/1.5mbps DSL line for an additional $99 per month.  He verbally guaranteed the speeds and I signed up for that contract as attached (DDSL10Mbps.pdf) believing the DSL to be an upgrade to the T1.

December 14, 2009

I receive the first bill from [Financial Company] and discover that there is no mention of the T1 on the bill.  I called and emailed [redacted]  from [Financial Company] to discover that they were not aware that [redacted]  included the T1 service in the leasing agreement.  The email I sent is copied below along with the proceeding communication that the original lease agreement is invalid.

This is when I discovered that [Financial Company] could not guarantee the T1 Service.  Should [redacted]  fail to provide T1 service during the 60 month period, then [Financial Company] would still require full payment.  My understanding was that [Financial Company] gave a lump sum to [redacted]  for signing us up for a $680/month lease payment.  [redacted]  was going to use that lump sum to pay for a separate T1 service, however, no written agreement or contract was setup regarding this and it’s still unclear to me how this would make financial sense to [redacted] .

December 22, 2009

[redacted] , an employee of [redacted] , contacted me about trying to separate the Lease payment from the service portion (email chain is below).  I communicated to [redacted]  that it was not acceptable.

December 23, 2009

[redacted]  signed a contract with Telepacific (TelepacificAnalog.pdf), despite my clear communication his offers were unacceptable, to remove our T1 Line with 18 phone lines down to 10 analog lines.

December 28, 2009

[redacted]  and [redacted]  came to the hotel to attempt to straighten things out.  He offered that we pay an adjusted $399/month for the lease of the equipment, and then $380/month to his company directly for the phone and Internet service to replace the T1.  I asked [redacted]  why I needed to go through him for the service when I could just go direct, and he stated that he gets a special discount.  I questioned how it was possible for [redacted]  to offer us 18 phone lines, and a fast Internet connection for just $380/month since I knew the DSL alone would cost $169.99 at the time.  [redacted]  stated that he knew nothing about how Telepacific was going to offer us a technical solution despite the fact that he had already signed a contract with Telepacific on the 23rd.

During the meeting, a technician from Covad came to the hotel to install DSL.  I was notified by the technician that [redacted]  had signed a contract with Megapath.  I called Megapath and let them know that their service was not authorized.  I also discovered that Megapath’s contracted speed was 10mbps/1.0mbps DSL and that a 10mbps/1.5mbps DSL does not exist.  I also discovered that they could not guarantee that I would get those speeds.  The technician from Covad, after determining the line speed, declared that the maximum speed possible is 6mbps/768kbps.

By the time I found out that they had signed a contract with Megapath, [redacted]  and [redacted]  had already left after talking with the owner of the hotel.

December 29, 2009

I talked with my Account Manager, [redacted] , from Telepacific and discovered that [redacted]  had fraudulently signed a contract on December 23, 2009.  The contract signed was that Telepacific was going to cut our phone service down to 10 analog lines and remove our existing T1 circuit.

Conclusion

It became clear to me that [redacted]  was intending to cut the quality of service to my hotel without my knowledge in order to save on expenses.  He demonstrated a pattern of misrepresentation and open fraud when signing the contract for Telepacific despite my clear communication regarding the unacceptability of his offers.

I have informed [redacted]  that his company is no longer allowed to come on property.

Potential Solution

[redacted]  will need to hire someone I trust to reinstall our old phone system and to remove the phone system he installed.

I will also be including you in any future email communication I have with the leasing company and [redacted]  unless you want me to remove you from the conversation.  Unfortunately, I do believe that [redacted]  has sold these packaged deals to other customers and is jeopardizing your company’s reputation.