“My Employees Filed for Unemployment for our Holiday Week Off!” You Asked – We Answered
Happy 2025, AADOM community! This month, we’re answering one of the most common questions we got from our CEDR members in December (that often affects businesses through January).
In case you’re new here, we’re CEDR HR Solutions, the trusted HR partner for dental and medical practices nationwide (and AADOM’s bestie). With over 15 years of experience, we specialize in helping office managers navigate the complexities of managing their teams, staying compliant with labor laws, and fostering thriving workplaces. Whether it’s creating customized employee handbooks, offering expert HR guidance, or tackling tricky team dynamics, we’re here to make your life easier and your practice more successful.
To get into this month’s topic, closing for several days for the end-of-year holidays is common. Offices have discretion regarding how to handle this in terms of pay and staffing. Some offices have the time off completely unpaid, with employees having the option to use available PTO if they have it left. Others give it as a paid week. Still, others have minimal staffing for the week for phone coverage and emergency treatment.
What has come up as a surprise to many who are completely closed and who do not pay for that time off is employees seeking out pay in other ways.
Here’s one of the questions we’ve received:
We closed for the week between Christmas and New Year’s. Most employees had some PTO to use, but a few had already used up their PTO for the year. My welcome back to the office after the holidays was opening the mail to find out that three employees filed for unemployment for our holiday week! I’m going to fight that, but can I require that they save up PTO for the holiday closure this year so that they don’t try to do this to us again?
The quick response is – yes, this can happen; yes, they may be able to receive benefits; and no, you can’t stop them from seeking unemployment.
Now, we’re here to explain why all of that is.
Why UI is Even an Option
We usually think about unemployment as being available when employees are truly unemployed – thus the name. However, in actuality, employees are able to seek unemployment benefits if they are available for work but are not being given hours. This is what allows individuals to seek benefits in the event of a furlough or other type of temporary business closure.
Employees are sometimes even able to receive benefits if they are “underemployed.” This is typically when an employee’s hours have been reduced. So if you were thinking that next time you will simply be able to give your employee a few hours of work during the closure to avoid unemployment, that won’t necessarily do the trick.
Specific criteria for being eligible for benefits vary by state, so we are speaking in generalities here. The amount of time the employee is “out of work,” the extent to which hours were reduced, and the employee’s income level with reduced hours, can impact their eligibility for benefits.
What You Can Do
If you have employees who were granted unemployment benefits due to being off the schedule for a few days, you have the right to appeal just like you do in any unemployment case. As always you’ll want to review the state’s criteria for eligibility to determine if there’s a good basis for appeal.
If you were in fact closed, we generally would not recommend trying to fight the employee receiving benefits. The employee may already be stressed over not having any income for a period of time. Seeing that their employer is trying to take steps to stop them from getting state benefits may cause real harm to your relationship with them.
Finally, do not retaliate against the employee for seeking benefits! You’re probably thinking that of course you would never do that. But we really mean it. Don’t comment negatively to them about it, don’t do anything to their hours, and don’t bring up the topic the next time they’re off from work for a few days. Employees have an absolute right to apply to the state for benefits, and protection from any adverse action taken against them for doing so.
What This is Going to Cost You
An employee being granted unemployment benefits does not have an immediate economic impact on the business. Unemployment pay to the employee does not come out of the business’ pocket. It’s paid through the state, funded through payroll taxes.
What unemployment claims do affect is your unemployment tax rate, typically referred to as your “experience rating.”
The experience rating is the figure that goes up and down based on the number of successful claims that have been filed against your account in a given timeframe. This is similar to car insurance. If you have an at-fault accident, your car insurance premium can increase for a while. Likewise, successful unemployment claims can increase the premium paid into the state.
The state looks at the number of claims on your account and, depending on what they find, they move your percentage up or down. The more successful claims that have been filed by your former employees, the higher your percentage will be. The timing and frequency of these assessments varies by state.
Planning for the Next Holiday Closure
If you are going to close for a week again, you should expect to have some employees apply for unemployment benefits again as well. There are two ways to avoid the unemployment claims – allow employees to work even if you’re out of the office, or pay employees during the closure.
The key with unemployment eligibility is that the employee isn’t being offered work or pay. If you put in writing to your employees that they have the option to work during the closure, but you are ok with them choosing to take the time off as unpaid instead, that may be enough to avoid them being eligible for benefits. In doing this, of course, you would need to ensure that there is work available to do, and that you are comfortable with people being in the office even if their supervisor isn’t there.
Many businesses choose to build into their benefits a paid week at the end of December. This is separate from the employee’s individual paid time off benefits. When we draft time off policies for our members, those who offer this as a benefit consistently note that it is hugely valuable to the team. Having that guaranteed extra paid time off at the end of the year can directly impact retention and attitude.
Tacking on this extra week of paid vacation may be untenable for you, and that’s ok. The “hit” from unemployment taxes going up, if that even happens, will be a lower upfront cost than paying everyone for the time off. Small businesses can’t do everything!
There are a few ways you could try to work this into your budget.
Many practices offer bonus programs. Moving forward you could adjust the bonus program so that you lower the funds budgeted for bonuses to free up funds to pay for end-of-year time off. This may mean that discretionary bonuses at the end of the year are lower. Or, that non-discretionary bonuses during the year are smaller or harder to reach.
If you offer more than one week of paid time off, you could adjust that policy so that one week is removed and is instead used to cover that week at the end of the year. A few words of caution here. First, you can’t take away benefits already earned or promised. So you should give notice of any changes to your time off policies before an employee’s benefit year starts.
Additionally, employees may not respond well to losing a week of time they otherwise got to use the way they wished. For this reason, you could start paying your current team the extra week but modifying your time off benefits for new hires.
At CEDR HR Solutions, we believe that better workplaces start with better leaders. Ready to transform how you manage your team? Visit our website to learn more about how our tailored HR solutions can support your practice. Whether you need expert advice, a comprehensive handbook, or a partner to navigate compliance challenges, we’re here to help. Schedule a free consultation today and see the difference a trusted HR partner can make!
