Unemployment Benefits: Information for Employers

Unemployment benefits, also called unemployment insurance (UI), are a program implemented by states to support employees who have been laid off or fired financially. The purpose of unemployment benefits is to support people while they search for new employment. An ex-employee receives a percentage of their wages or salaries.

What Is Unemployment Insurance?

Unemployment insurance, also known as unemployment benefits or unemployment compensation, is a form of temporary income that eligible unemployed persons can collect from various government agencies in their respective states.

State payroll taxes typically fund unemployment insurance programs. Unemployment benefits are distributed to state residents who qualify using a portion of the taxes.

Although unemployment insurance benefits primarily stem from state payroll taxes, such benefits result from federal regulations enforced by the U.S. Department of Labor (“DOL”).

Specifically, the federal Social Security Act of 1935 established an unemployment insurance program, and the Federal Unemployment Tax Act (“FUTA”) now governs and administers funds to support state unemployment programs.

For instance, FUTA requires each state to establish an unemployment insurance plan compliant with relevant federal and state unemployment laws. It is permissible for states to adjust rates and modify some eligibility requirements, but most state unemployment insurance programs must follow federal guidelines. Various states may have different unemployment policies.

For example, an individual who qualifies for unemployment insurance in New York may receive approximately $504 per week. In contrast, a person eligible for unemployment insurance in Massachusetts can collect up to $742 per week. Massachusetts has the highest unemployment insurance rate in the country, by the way.

The distribution of unemployment insurance benefits is also subject to certain conditions.

What Are Some Eligibility Factors?

An individual will not be eligible for unemployment benefits if any of the following factors apply:

• If the individual was fired for a just cause;
• If the individual voluntarily left or quit their job; or
• If the individual is or was self-employed (note that this rule has been temporarily suspended as of the passing of the 2020 CARES Act).

Therefore, unemployment insurance is only available to those who have lost their jobs due to reasons beyond their control and who meet the requirements of their state’s program.

If all other requirements are met, and assuming their application is approved by their state agency, an individual forced to leave their job due to permanent illness or injury may qualify for unemployment insurance.

Furthermore, many people may qualify for stimulus checks based on their income level, latest tax return statement, or the number of dependents in their household. Throughout the pandemic, the federal government has periodically issued stimulus checks to citizens.

It is possible to receive stimulus checks even if you have a job. Therefore, if you believe you are owed a stimulus check but have not yet received it, you should visit the IRS website and use their tracking tool.

For more information about your state’s unemployment insurance program or to determine if you are eligible for unemployment insurance benefits, you can visit the website for your state’s unemployment insurance program or consult a local employment lawyer.

Which Employees Are Eligible for Unemployment Benefits?

Unemployment benefits are generally available to unemployed employees without their own fault:

• Fired Employees: Some employees who are fired may still be eligible for benefits. If an employee is fired for minor transgressions such as occasional tardiness or is not a good fit for the job, they may still be eligible for benefits.
• Laid Off Employees: Employees discharged or temporarily laid off due to workforce reductions or company cutbacks are eligible.
• Employees Who Quit: Employees who quit may still receive unemployment benefits if they quit for a “good cause” and made efforts to keep their employment. Good causes might include unsafe work conditions, quitting on a doctor’s advice, or sexual harassment.

Who Is Eligible for Unemployment Insurance?

It has been mentioned previously that each state may adopt its own unemployment insurance policies and create additional guidelines.

There are, however, some basic elements that are common to most state unemployment insurance programs, including:

• A worker must have been employed by a business that pays for unemployment insurance.
• A worker must have earned a certain income or worked for a specific time (note that these criteria will vary widely by state).
• A worker must not have been terminated for just cause, or be the reason they are no longer employed (e.g., they quit).
• Originally, a worker would not be eligible to collect or even apply for unemployment insurance if they were an independent contractor or self-employed. However, since the CARES Act in 2020, this requirement has been temporarily suspended.
• A worker must report any income that they earn while receiving unemployment benefits.
• Workers who are granted unemployment insurance must also fill out and submit a weekly worksheet that proves they are actively applying for jobs. In addition, a worker must accept the position if they receive a job offer.

Aside from the changes mentioned above, the CARES Act of 2020 also expanded the eligibility criteria for unemployment insurance. As a result, many workers who were not previously eligible for unemployment insurance may now be eligible.

As a result of the CARES Act, the following modifications were made to the criteria for unemployment insurance:

• A worker can now apply and collect unemployment insurance if an employer reduces their work hours due to coronavirus guidelines.
• Workers permanently or temporarily laid off because of the pandemic can also now collect unemployment insurance benefits.
• A self-employed worker who lost income due to the pandemic and related measures may also be eligible to receive unemployment benefits.
• A worker who is unable to work due to risk of exposure to the coronavirus or because they are caring for a family member due to the coronavirus may also be able to collect such benefits.
• Workers who were quarantined and unable to work because of the coronavirus are now eligible to apply and collect unemployment insurance too.

Finally, the American Rescue Plan of 2021 made further changes to unemployment insurance by extending the number of weeks a person can collect unemployment benefits under their current plan.

For instance, the American Rescue Plan of 2021 tacks on extra weeks for unemployment benefit payments if:

• An individual is already receiving unemployment insurance. If so, their benefits will be extended for another twenty-five weeks until September 6, 2021.
• Those who have been collecting unemployment insurance benefits will also continue to receive the weekly supplemental benefit of $300 in addition to their regular benefits through September 6, 2021.

What Will Employment Benefits Cost My Business?

Employers, not employees, fund unemployment insurance programs depending on the state and the amount and method vary.

Generally, companies are taxed a certain amount based on the number of employees on the payroll and the number of unemployment claims filed against the company. Employers may contribute more to unemployment insurance if there are more claims.

Can My Company Contest a Claim?

Unemployed employees may apply for unemployment benefits with the state’s unemployment office when they become unemployed. State law determines whether the employee is eligible for benefits. Notice of eligibility will be sent to the employer following this determination.

Nevertheless, you can contest the claim if you believe the employee should not be eligible for benefits due to misconduct or other serious reasons surrounding his departure.

Be aware that contesting a claim will take time and money. Additionally, contesting a claim may encourage a former employee to file for wrongful termination.

Do I Need a Lawyer to Contest an Unemployment Insurance Claim?

Your state unemployment office can provide information and guide you through the process of contesting unemployment benefits. It is possible, however, for some employees to file a lawsuit for wrongful termination if they are denied benefits.

If you are facing a lawsuit, you should consult a workers’ compensation lawyer to discuss your options.