Each State administers a separate unemployment insurance program within guidelines established by Federal law. Eligibility for unemployment insurance, benefit amounts and the length of time benefits are available are determined by the State law under which unemployment insurance claims are established.
In the majority of States, benefit funding is based solely on a tax imposed on employers. Three 3 States require minimal employee contributions. For additional information. Eligibility You must meet the State requirements for wages earned or time worked during an established period of time referred to as a "base period". In most States, this is usually the first four out of the last five completed calendar quarters prior to the time that your claim is filed. You must be determined to be unemployed through no fault of your own determined under State law , and meet other eligibility requirements of State law.
Filing a Claim You should contact the State Unemployment Insurance agency as soon as possible after becoming unemployed. In some States, you can now file a claim by telephone or over the Internet. When you file a claim, you will be asked for certain information, such as addresses and dates of your former employment.
The rules that determine classification for employment at the Federal level follow common law. For IRS, the facts that provide evidence of the degree of control and independence fall into three categories:. State unemployment insurance agencies use their own rules to determine whether to categorize an activity as employment for state UI purposes.
A household worker is an employee who performs domestic services in a private home. Examples of household employees are: babysitters, caretakers, cleaning people, drivers, nannies, health aides, yard workers and private nurses. The 20 weeks do not have to be consecutive weeks, nor must they be the same 10 employees, nor must all employees be working at the same time of the day. This included more than 15 million people who were collecting benefits under pandemic-related expansions of the program.
Total continuing claims have declined sharply since then. In the week ending October 2, , they stood at 3. However, employers who pay their state unemployment taxes on time receive an offset credit of up to 5.
The credit is reduced in states that are overdue in repaying unemployment insurance debt owed to the U. While state spending on UI is not subject to balanced budget rules and states can borrow from the Treasury if they exhaust their reserves, they have to repay the federal government within two to three years , or federal taxes on employers automatically increase until the debt is paid.
States have extensive flexibility in determining benefits. Federal requirements are minimal, while ensuring that all states provide basic protection for eligible workers.
States are free to choose the level of employer tax, the benefit level and duration of benefits, and the eligibility criteria, such as the extent and duration of prior employment. There is considerable variation in how states run this program. For instance, while the standard maximum time for which eligible people can collect benefits is 26 weeks, when the COVID crisis began in late February , states like Florida and North Carolina were limiting state-paid benefits to just 12 weeks.
Most state UI systems replace 30 to 50 percent of prior weekly earnings, up to some maximum. Since payments are capped, UI replaces a smaller share of prior earnings for higher-income workers than lower-income workers. While program formulas vary significantly , states that have higher maximums tend to have higher replacement rates.
Unemployment is almost entirely funded by employers. Each state has its own finance method and its own calculation to determine the tax rate an employer pays. You can read about that here. A deduction in the account balance may also cause a rate increase, as the ratio between taxable payroll and the account balance changes.
The state formulas generally use a three-year moving period to assign a tax rate. Each awarded unemployment claim can affect three years of UI tax rates. However, it can be far more, eclipsing the cost of the claim itself.
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