About Unemployment Insurance in the United States

About Unemployment Insurance in the United States

If you lost your job through no fault of your own, you may be eligible for unemployment compensation. The program meant to keep you up on your feet and putting food on the table until you can find your another source of income. However this gravy train has a time limitation and applying for a new job every week is a baseline requirement.

Unemployment compensation began in 1932 in the state of Wisconsin. Other states adopted the concept when the federal government passed the Social Security Act of 1935. Today all 50 states (plus the District of Columbia, Puerto Rico and United States Virgin Islands) have unemployment insurance programs.

Who Pays For It?
Both federal and state agencies run unemployment compensation. Unemployment insuace in the United States paid for through employer payroll taxes. In general, employers must pay both state and federal unemployment taxes if:

1. They pay wages to employees totaling $1,500 or more in any quarter of a calendar year
OR
2. They had at least one employee during any day of a week during 20 weeks in a calendar year regardless of whether they were consecutive. (Some state tax regulations differ from the federal requirement)

The Internal Revenue Service collects through the tax by the Federal Unemployment Act (FUTA). FUTA covers the cost of administering unemployment insurance and job service programs in all states. When unemployment levels are high, FUTA also pays one half the cost of extended benefits and provides a fund for states to borrow against to pay benefits when necessary.

The Federal Pandemic Unemployment Compensation (FPUC) increased the amount of benefits by $600 in addition to the normal amount allotted by state programs.

Employers may receive a credit of 5.4% when they file their Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return PDF, to result in a net FUTA tax rate of 0.6% (6.0% – 5.4% = 0.6%)This brings the percentage down to 0.8 or $56 per employee per year. For example a business with 100 employees is paying a minimum of $5,600 annually to FUTA to fund federal unemployment compensation.

Individual states raise their own funds and run their own programs based on the broad guidelines set by the federal government for eligibility and coverage.

Who Is Eligible?

The federal government sets broad guidelines for coverage and eligibility, but states vary in how they determine benefits and eligibility. Generally, the following requirements apply:

• A worker must have worked for at least one quarter in the previous year. Workers are normally not eligible if they were temporary workers or paid under the table.
• A worker must meet state requirements for wages earned or time worked during an established period of time (referred to as a “base period”) to be eligible for benefits. In most states, the base period is usually the first four out of the last five completed calendar quarters prior to the claim being filed.
• A worker must have been laid off. Workers are not normally eligible if they quit without good cause, are fired for misconduct, or became unemployed in a labor dispute. If the employer shows an unemployed person quit or was fired for cause, the worker must return the benefits they received.
• A worker must be available for work and must accept a suitable offer of employment.

If the worker’s claim is denied, then they have the right to appeal. If a worker was fired for misconduct, then the employer must prove that the termination of employment is a misconduct defined by individual states laws. However, if the employee quit their job, then they must prove that their voluntary separation must be good cause

Part-time, temporary and self-employed workers do not qualify for unemployment insurance. Generally, this means you were a full-time employees who was laid off.

“Just Cause”
The key phrase defining eligibility is losing your job “through no fault of your own”. However, you may have been fired without just cause. You may have even quit voluntarily WITH just cause ( for example: a supervisor may have been treating you unfairly for an extend period of time which eventually made your work experience unbearable).

In these cases, the worker must file for unemployment and usually required to file an appeal. If the appeal seems reasonable, the employer and employee appear before a judge and plead their cases.

You must also meet state requirements for wages earned or time worked during an established period of time (“base period”) to be eligible for benefits. In most states, the base period is usually the first four out of the last five completed calendar quarters prior to filing of a claim.

Each of the 50 U.S. states, as well as the District of Columbia, Puerto Rico, and U.S. Virgin Islands, administer their own unemployment insurance programs. State governments pay unemployment benefits, funded in large part by state and federal payroll taxes levied on employers, to workers who have become unemployed through no fault of their own.

Every State has a maximum benefit however they are generally based on reported covered quarterly earnings. The amount of earnings and the number of quarters worked determine he length and value of benefits.

The average weekly payment is 36% of the worker’s average weekly wage.

Unemployment Insurance In The United States: How Much & How Long

United States Department of Labor, Employment and Training Administration establish Federal rules for unemployment insurance in the United States. The maximum period for receiving benefits for most states is 26 weeks.

However during economic conditions that create high unemployment rates, benefits have been extended.

As a result of the American Recovery and Reinvestment Act passed by Congress in February 2009, it may be possible to receive unemployment benefits for up to 99 weeks. This extended period of compensation may also depend on State legislation.

During the COVID-19 pandemic in 2020, the CARES Act created three programs that significantly expanded unemployment insurance benefits.

The Pandemic Emergency Unemployment Compensation (PEUC) extended benefit duration by 13 weeks for those who have otherwise exhausted benefits. The Pandemic Unemployment Assistance (PUA) expanded eligibility for unemployment insurance temporarily, extending it to any individual who is out of work due to the pandemic, including formerly self-employed, contract, and gig workers.

Insurance In The United States: Where Do You Start?

If you’ve lost your job through no fault of your own or feel you were terminated without just cause, you can file an unemployment compensation claim with your State unemployment agency.

Unemployment Help

How to Apply for Unemployment Benefits

COVID-19 Unemployment Benefits