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 the applicability of filing penalties, effective January 1, 2019.
Updated to reflect the 2019 state taxable wage base amounts.
In-depth review of the spectrum of Washington employment law requirements HR must follow with respect to unemployment insurance tax (FUTA/SUTA).
Updated to include a provision regarding disqualification from unemployment benefits for misconduct, effective August 24, 2018.
Updated to include the paid family leave contribution rate, effective January 1, 2019.
Updated to include a provision addressing eligibility for unemployment benefits during temporary layoffs, effective July 9, 2018.
Updated to include the Property Service Workers Protection Act, effective July 1, 2018.
Updated to reflect an increase in the penalty for failing to timely file quarterly reports, effective July 1, 2018.
HR guidance on laws governing unemployment insurance.