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Your former employees can collect unemployment insurance (UI) if they quit their job with good cause.
It is important to understand the term “good cause” when deciding whether it is a worthwhile investment of your company’s time and money to fight a claim for UI.
An employee who quits is not automatically disqualified from receiving UI benefits. An employee who quits with good cause can collect benefits.
“Good cause” means the employee’s reason for leaving must be something substantial and compelling that would cause a reasonable person who genuinely wanted to remain employed to quit anyway.
Some common examples include quitting to take a substantially better job, to move to another state when the employee’s spouse’s job is transferred, or as a result of a substantial reduction in pay (usually 20% or more).
In order to be eligible for benefits after quitting, the employee must also show they attempted to preserve the employment relationship, such as by asking for transfer to another location closer to their new home or explaining that the reduction in pay is so drastic that they will not be able to pay necessary expenses such as rent.
More information about UI benefit eligibility is available in the Employment Development Department’s Benefit Determination Guide, available on the EDD website.