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Unemployment Insurance: South Carolina

Unemployment Insurance requirements for other states

Federal law and guidance on this subject should be reviewed together with this section.

Author: Meryl Gutterman, formerly of Nukk-Freeman & Cerra, P.C.

Summary

  • Unemployment insurance is a nationwide program created to provide partial wage replacement to unemployed workers while they conduct an active search for work. Unemployment insurance is a joint federal-state program based on federal law and executed through state law. See South Carolina Unemployment Insurance.
  • Under South Carolina law, an employer must establish an unemployment tax account and make quarterly unemployment insurance tax contributions if it meets certain criteria. See Covered Employers.
  • Individuals must meet certain eligibility requirements to receive unemployment insurance benefits. See Eligibility Requirements.
  • Employers that experience regularly occurring vacation periods may not have to pay unemployment insurance benefits during that time and employees may be ineligible for unemployment benefits. See Employer Vacation Policy.
  • When a claimant files for unemployment benefits, the South Carolina Department of Employment and Workforce investigates the claim by contacting both the claimant and the claimant's former employer. See Filing Claims.
  • Employers are subject to certain recordkeeping requirements, quarterly contribution and wage reporting requirements, and posting requirements. See Recordkeeping and Reporting Requirements; Posting Requirements.

South Carolina Unemployment Insurance

Unemployment insurance benefits provide temporary financial assistance to workers unemployed through no fault of their own that meet South Carolina's eligibility requirements. Employees who are discharged for cause are not typically entitled to unemployment benefits.

The South Carolina Department of Employment and Workforce (DEW) is responsible for the collection, accounting and auditing functions of South Carolina's unemployment insurance tax program. S.C. Code Ann. § 41-29-110 to S.C. Code Ann. § 41-29-310.

Covered Employers

Most employers doing business in South Carolina are subject to South Carolina's unemployment compensation law. Covered employers pay contributions to the unemployment trust fund, which is maintained to distribute unemployment benefits to eligible workers. +S.C. Code Ann. § 41-33-80.

Under South Carolina law, a covered employer must establish an unemployment tax account with DEW and make quarterly tax contributions. Covered employers include, but are not limited to, employers that:

  • Pay $1,500 or more in wages in any calendar quarter;
  • Have at least one employee during any 20 weeks in a calendar year;
  • Acquire a business that was an employer subject to unemployment insurance taxes at the time of the acquisition;
  • Are responsible under the Federal Unemployment Tax Act (FUTA) and have employees in South Carolina;
  • Elect to become a responsible employer;
  • Pay wages of $1,000 or more in any calendar quarter for domestic services;
  • Pay $20,000 or more to individuals employed in agricultural labor during any calendar quarter;
  • Employ 10 or more individuals in agricultural labor for a day in any 20 weeks in a calendar year; and
  • Are certain nonprofit organizations, Indian tribes and state and local government employers.

+S.C. Code Ann. § 41-27-210; +S.C. Code Ann. § 41-27-230; +S.C. Code Ann. § 41-27-235; +S.C. Code Ann. § 41-37-20.

In some circumstances, an employer is not subject to unemployment taxes and unemployment insurance is not available to its employees. Types of workers not eligible for South Carolina unemployment compensation include, but are not limited to:

  • Certain independent contractors;
  • Newspaper delivery persons under the age of 18;
  • Individuals employed by their child or spouse, and children under the age 18 employed by their parent;
  • Insurance agents and solicitors, and real estate brokers and salespersons paid by commission;
  • Certain employees of the US government or an instrumentality of the US;
  • Enrolled student nurses employed at a hospital or a nurses' training school, and interns employed at a hospital who have completed medical school;
  • Certain church employees, ministers and employees of an organization operated primarily for religious purposes;
  • Inmates of a custodial or penal institution;
  • Employee-students of a school, college or university, and spouses of students provided employment under a financial aid program for the student;
  • Elected officials, members of the legislature and judiciary, members of the South Carolina National Guard or Air National Guard, and employees serving on a temporary basis in case of emergency;
  • Officers of a corporation (not applicable to sole proprietorships, partnerships or limited liability companies);
  • Employees of a religious, charitable, educational or other organization, if the employee's services are excluded from the term employment as defined by FUTA; and
  • Employees of an Indian tribe, if the employee's services are excluded from FUTA's definition of employment.

+S.C. Code Ann. § 41-27-260; +S.C. Code Ann. § 41-27-265.

An employer may elect not to cover corporate officers by submitting an Application for Exemption of Corporate Officers to the DEW. To make the election, an employer must register all qualifying corporate officers exempt from coverage, and the exemption must last at least two calendar years.

+S.C. Code Ann. § 41-27-265.

Eligibility Requirements

In order to qualify for unemployment benefits, an individual must have worked in South Carolina for a period of 12 to 18 months and have earned at least a minimum amount of wages as determined by DEW guidelines.

Unemployed individuals are eligible to receive benefits for any week if the DEW finds that the individual:

  • Has made a claim for benefits;
  • Has registered for work and continues to report to an unemployment office;
  • Is able and available for work and is actively seeking work;
  • Has satisfied a one-week waiting period;
  • Has separated from employment through no fault of his or her own;
  • Participates in reemployment services as required; and
  • Has received sufficient wages for a sufficient period of time.

+S.C. Code Ann. § 41-35-110.

Events That Disqualify Individuals From Collecting Unemployment

An insured worker is ineligible for benefits for:

  • Leaving work voluntarily, without good cause;
  • Discharge for misconduct connected with employment;
  • Discharge for cause connected with employment, other than misconduct;
  • Discharge for illegal drug use under certain circumstances;
  • Discharge for gross misconduct;
  • Failure to apply for or accept available suitable work;
  • Certain labor disputes;
  • Receiving or seeking unemployment benefits elsewhere; and
  • Voluntary retirement.

Misconduct is defined as conduct showing willful and wanton disregard of an employer's interests (e.g., deliberate violations or disregard of standards of behavior that the employer has the right to expect of the employee; carelessness or negligence of such a degree or recurrence that establishes equal culpability, wrongful intent or evil design; intentional and substantial disregard of the employer's interest or of the employee's duties and obligations to the employer). It does not include termination resulting from extreme hardship, emergency, sickness or other extraordinary circumstances.

Discharge for cause does not include termination for substandard performance due to inefficiency, inability or incapacity.

A discharge for illegal drug use must be supported by these facts:

  • The employer communicated a policy prohibiting illegal drug use and warning that a violation may result in termination; and
  • The employee failed or refused to provide a specimen upon the employer's request or refused to cooperate by providing an unadulterated specimen; or
  • The employee provided a blood, hair or urine specimen during a drug test administered on behalf of the employer, which tests positive for illegal or unlawful drug use, provided:
    • The specimen was collected and labeled by a licensed health care professional or other authorized individual;
    • The test was performed by a laboratory certified by the National Institute on Drug Abuse, the College of American Pathologists or the State Law Enforcement Division; and
    • An initial positive test was confirmed on the specimen using the gas chromatography/mass spectrometry method or an equivalent method.

Gross misconduct includes:

  • Willful or reckless damage to employer property that results in damage of more than $50;
  • Consumption of alcohol or being under the influence of alcohol on employer property in violation of a written company policy restricting or prohibiting consumption of alcohol;
  • Theft of items valued at more than $50;
  • Failure to comply with applicable state or federal drug and alcohol testing and use regulations while on the job or on duty;
  • Criminal assault or battery of another employee or a customer;
  • Criminal abuse of a patient or child in the employee's professional care;
  • Willful failure to comply with a supervisor's lawful, reasonable order that is directly related to the employee's employment as described in an applicable written job description (i.e., insubordination); or
  • Willful neglect of duty directly related to the employee's employment as described in an applicable written job description.

In determining whether work is suitable, the DEW considers:

  • The degree of risk involved to health, safety, and morals;
  • Physical fitness and prior training;
  • Experience and prior earnings;
  • Length of unemployment and prospects for securing local work in the employee's customary occupation; and
  • The distance of the available work from the employee's residence.

+S.C. Code Ann. § 41-35-120.

Employer Vacation Policy

Employees may be ineligible for unemployment benefits for up to two weeks of unpaid vacation time per year. The employer must have either a written contract with the employee or a policy providing for regularly scheduled unpaid vacation time each year. +S.C. Code Ann. § 41-27-370(4).

Employer Contribution Requirements

Employers must contribute to the unemployment compensation fund. Tax contributions are based on the amount of wages paid to employees in a quarter as reported on the employer's quarterly wage report.

When employers become subject to unemployment insurance taxes, they are assigned a new employer rate. Tax rates are re-determined each calendar year based on the employer's history. +S.C. Code Ann. § 41-31-40; +S.C. Code Ann. § 41-31-50. An employer's exact rate depends on the employer's experience rating and current economic conditions. +S.C. Code Ann. § 41-31-30.

Filing Claims

When a claimant files for unemployment benefits, DEW investigates the claim by contacting both the claimant and the claimant's former employer. DEW then issues a written determination detailing its initial ruling on the claimant's eligibility for benefits. +S.C. Code Ann. § 41-35-620.

When a former employee files for UI benefits, the employer has the opportunity to supply information to DEW regarding the reason the individual is now unemployed.

The employer must respond to DEW within 10 calendar days of receiving the notification in order to prevent a former employee from wrongfully receiving unemployment benefits. +S.C. Code Ann. § 41-35-615; +S.C. Code Ann. § 41-35-640.

The claimant or any other interested party may file an appeal from a determination not later than ten days after the determination was mailed to the party's last known address. This includes the claimant's last known employer or any other employer that may have been affected by the determination. +S.C. Code Ann. § 41-35-640; +S.C. Code Ann. § 41-35-660.

Recordkeeping and Reporting Requirements

Each employer must preserve the following records for five years:

For each pay period:

  • The beginning and ending dates of each pay period; and
  • The largest number of workers employed each calendar week of the period.

For each individual employed during the period:

  • Name and Social Security account number;
  • Total hours worked each week, if less than full time;
  • Wages paid (special payments included);
  • Reasonable cash value paid in any medium other than cash; and
  • Date hired, rehired or returned to work after temporary layoff and the date and reason the job was lost.

+S.C. Code Ann. § 41-29-150; +S.C. Code Regs. 47-14.

Employers must file quarterly contribution and wage reports including information required by law and regulation. +S.C. Code Ann. § 41-31-160; +S.C. Code Ann. § 41-27-380; +S.C. Code Regs. 47-15.

Posting Requirements

Employers must display an informational poster and a poster of coverage information as required and furnished by the DEW. The posters must be displayed in conspicuous places where workers perform their services. +S.C. Code Regs. 47-11; +S.C. Code Regs. 47-12.

Future Developments

There are no developments to report at this time. Continue to check XpertHR regularly for the latest information on this and other topics.