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 include information on a Kentucky Supreme Court case regarding liability for making false statements in unemployment proceedings.
Updated to include final regulations governing supplemental EMACs, effective January 1, 2018.
Updated to reflect forthcoming protections against identity theft under the Michigan Employment Security Act.
Updated to reflect the federal tax reform law's effect on family and medical leave benefits, effective January 1, 2018.
Updated to include an amendment related to unemployment benefits eligibility and domestic violence, effective January 1, 2018.
Updated to reflect the applicability of electronic filing and electronic funds transfer requirements to smaller employers, effective January 1, 2018.
Updated to reflect changes in the list of FUTA-exempt wages under the federal tax reform law, effective January 1, 2018.
Updated to include the requirement that all employers must file quarterly reports and payments electronically, effective January 1, 2018
HR guidance on laws governing unemployment insurance.