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Unemployment Compensation Overview
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All states provide compensation to unemployed workers under certain circumstances. Generally, states require employers to contribute to an unemployment compensation fund for all employees. When an eligible former employee seeks benefits, the states make payments from the fund. Most states exempt charitable or non-profit organizations from unemployment compensation coverage. They also exclude employers that have a very small number of employees. Furthermore, in order to be covered by unemployment compensation, a worker must be an actual "employee" and not merely an independent contractor.
Eligibility for Unemployment Benefits
Although the state statutes are not identical, they generally provide a set amount of compensation for a set period of time for persons who are:
- Registered for work,
- Seeking work, and
- Available for work.
Generally, an employee must have worked a certain number of weeks in the prior one-year period in order to be eligible for benefits. The employee's benefit amount is based upon his or her average weekly wage. In some states, terminated employees receiving severance pay are ineligible for unemployment benefits. In other states, they are not excluded from coverage. Vacation and accrued sick leave payments are generally considered to be wages.
Unemployment benefits are not generally available to employees whose employment is ended under the following circumstances:
- Chronic absenteeism or tardiness,
- Outright insubordination,
- Intentional violation of workplace rules, or
- Resignation without "good cause."
Employees are usually entitled to benefits when their employment ends for reasons not attributable to intentional misconduct by the employee, such as:
- Inability to perform the job tasks,
- Simple negligence,
- Unintentional violations of workplace rules,
- Absences or tardiness supported by a good cause (i.e. valid transportation problems), or
- Resignation for a "good cause," (i.e. taking care of a sick family member).
An employee may not receive unemployment compensation in situations where he or she is no longer available to work. For example, an employee who leaves his or her job to go back to school or to retire may not file a claim for unemployment insurance benefits.
Copyright 2010 LexisNexis, a division of Reed Elsevier Inc.
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