Unemployment Benefits: Who Qualifies?

Unemployment benefits are a temporary safety net for unemployed workers. Each state – as well as the District of Columbia – has its own requirements for receiving benefits, so your eligibility for unemployment depends on the state in which you work.

As a form of social welfare, unemployment insurance is paid to qualified unemployed workers by the state, and is paid by employers through state and federal payroll taxes. The Federal Unemployment Tax Act (FUTA), started in 1935, mandated that employers pay these taxes to compensate unemployed workers until they find new jobs.

Eligibility requirements

Unemployment benefits eligibility varies by state, but most include some minimum requirement of time the employee worked within a specified period prior to losing their job. You will need to check with your state unemployment office to find out the specific requirements that apply to you. How long you may receive benefits, and at what rates are determined by the state where your employer operates.

To qualify for unemployment benefits, a worker must have lost their job through no fault of their own. Layoffs, workforce reductions or plant closings that force employees out of work are qualifying events. If, on the other hand, an employee quits their job voluntarily without good cause, or is fired for cause, then that worker would not be able to receive unemployment benefits.

An employee may receive benefits after quitting a job if their reason for leaving was due to some detrimental issue such as safety or health risk, sexual harassment, or other reason that would cause any reasonable person to leave.

If you are fired from your job, you are not necessarily disqualified from receiving unemployment compensation. Depending on the employer’s reason for firing you, the severity of an infraction that led to your dismissal (e.g. an attendance issue), you may still be able to file a claim for insurance.

Contesting a claim

An employer may choose to contest an unemployment claim, if they feel the grounds for dismissal disqualifies the employee for unemployment benefits. The employee cannot refuse to pay benefits, however, as that decision is made by the state unemployment office. Contested claims are expensive for the employer, and can be the catalyst for a wrongful termination suit, so employers are generally reluctant to contest a claim without a compelling reason.

Cost of unemployment benefits

The rate of unemployment compensation differs from state to state, as does the state tax rate your employer pays. The federal tax payment into FUTA is 6 percent of the employee’s first $7,000 of income each year.

Employers’ unemployment rates will also vary based on the number of claims filed by former employees. This can be an incentive in some cases for employers to offer an alternative, such as severance packages in order to keep their unemployment costs down. If you’ve lost your job as part of a mass layoff, it may be to your benefit to negotiate a compensation package other than unemployment insurance.

Filing a claim

If you’ve been fired or quit your job for qualifying reasons, you should file a claim as soon as possible. The claims process can take several weeks, and some states require a waiting period before you can begin receiving benefits.

To find out whether you qualify for unemployment compensation, you can apply with your state unemployment office, which can more frequently be done online or by phone as well as in person. You can find the requirements, and where to file, for your state here.

If you believe you have been wrongfully discharged, or your employer is contesting your unemployment claim, you should contact a labor attorney in your state for advice on state and federal laws applicable to your case.