A Closer Look at Unemployment Claims for Small Businesses

As a small business owner, navigating the world of unemployment insurance can often feel like traversing a maze with no clear path. One question that arises frequently is whether contesting unemployment claims is worth the effort and resources. It’s a question that deserves careful consideration, as the implications can be significant for your business. So, let’s delve into the topic and explore the pros and cons.

Understanding Unemployment Insurance:

Before we weigh the pros and cons, let’s first understand how unemployment insurance works. Unemployment insurance is a state-operated program designed to provide temporary financial assistance to individuals who have lost their jobs through no fault of their own. Employers pay into this program through taxes, and when an employee files for unemployment benefits, the state uses these funds to provide them with financial support.

Pro’s and Con’s of Contesting Unemployment:


  1. Cost Savings: Contesting an unemployment claim can potentially save your business money in the long run. By successfully contesting claims, you may reduce your unemployment insurance tax rate, ultimately lowering your overall expenses.
  2. Protecting Your Business: Contesting unjustified claims can help protect your business’s reputation and prevent fraudulent or unwarranted claims in the future. It sends a message that your company takes compliance seriously.
  3. Preserving Resources: By contesting claims, you’re also preserving your company’s resources that would otherwise be allocated towards paying higher unemployment insurance taxes.


  1. Time and Effort: Contesting unemployment claims can be time-consuming and require significant effort on behalf of your HR team or legal counsel. This can detract from other essential tasks within your business.
  2. Potential Legal Costs: In some cases, contesting a claim may escalate into a legal battle, resulting in additional expenses for your business.
  3. Employee Relations: Contesting claims may strain relationships with former employees and potentially damage your employer brand if not handled delicately.

State-Specific Considerations: Kansas vs. Missouri:

It’s important to note that unemployment insurance laws and procedures can vary from state to state. For example, in Kansas, employers have the right to contest unemployment claims, and the burden of proof lies with the claimant. Conversely, in Missouri, both employers and employees have the right to appeal decisions made by the state’s unemployment agency.

The Impact of Not Contesting Unemployment Claims:

Choosing not to contest unemployment claims against your business can have several ramifications. Firstly, it may lead to higher unemployment insurance tax rates for your business, resulting in increased operational costs. Additionally, failing to contest claims could set a precedent and embolden other employees to file unjustified claims in the future, further burdening your business financially.

How HR Can Help:

If you’re unsure whether to contest an unemployment claim, consulting with your HR department or an HR professional can provide valuable guidance. They can help you assess the merits of the claim, navigate the appeals process, and ensure compliance with state-specific regulations.

The decision to contest unemployment claims should be made thoughtfully, weighing the potential benefits against the associated costs and considerations. While contesting claims may require time and resources, it can ultimately safeguard your business’s financial health and reputation in the long run.