Overview: Unemployment insurance provides temporary financial assistance to workers who have lost their jobs through no fault of their own. Unemployment insurance is administered at the state level (in compliance with federal law), and each state establishes its own rules with respect to amounts, duration and eligibility for benefits.
The Federal Unemployment Tax Act (FUTA) requires employers to pay a federal tax of six percent of the first $7,000 paid to each employee. Most states also require employers to make additional contributions. Only a handful of states require employees to make contributions to unemployment insurance.
Eligibility for benefits varies by state, but in most states unemployed workers must:
Benefits are generally a percentage of earnings over the most recent 52 weeks up to a state maximum and are usually paid for up to 26 weeks. Additional benefits may be provided during periods of high unemployment.
Trends: While employees who quit their jobs generally are not entitled to receive unemployment benefits, some states make an exception for employees who quit due to domestic violence, including Arizona, Arkansas, California, Maryland, New Jersey, Texas, Washington and, beginning October 5, 2014, Minnesota.
Author: Tracy Morley, SPHR, Legal Editor
Updated to reflect forthcoming amendments to the unemployment insurance law.
Updated to reflect the forthcoming West Virginia Safer Workplace Act and forthcoming amendments regarding unemployment benefits eligibility during a labor dispute.
Updated to include the requirement to pay contributions to fund benefits under the Universal Paid Leave Amendment Act of 2016, effective April 7, 2017.
Updated to reflect the 2017 state taxable wage base amounts.
Updated to include online quarterly payment requirements, effective January 1, 2017.
Updated to incorporate electronic filing and electronic funds transfer requirements, effective January 1, 2017.
HR guidance on laws governing unemployment insurance.