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Unemployment Compensation – Just the Basics
May 2000Unemployment compensation originated as part of the Social Security Act and became effective in 1936. Its major objective was to make benefits available to workers who became unemployed through no fault of their own. Nonprofit organizations have been required to participate since 1972.
Structure
The program is administered according to state law. Each state provides a complete self-contained unemployment compensation program that is administered by state employees. Each state has its own tax structure, qualifying requirements, benefit levels and disqualification provisions.
Finance
Unemployment compensation is financed entirely by employers, not by the employee or the state agency.
Common qualifying requirements
- Lost job through no fault of their own.
- Have significant earnings and/or weeks of employment prior to filing for benefits. State requirements vary.
- Be available and capable of working, i.e., ready, willing and able to work.
Benefits
Most states permit eligible claimants to receive 26 weeks of benefits. Formulas vary, but claimants usually receive at least 50% of their average weekly wage not exceeding a maximum as determined by state law.