Unemployment compensation, sometimes referred to as unemployment insurance (UI), is a government sponsored program. Both federal and state governments seek to protect eligible employees who become involuntarily unemployed through no fault of their own by providing temporary financial assistance. Under certain circumstances, when you lose your job, you can seek benefits, known as unemployment compensation, for a specified period of time or until they are able to find a new job. The purpose of the compensation is to give the unemployed worker sufficient time to find a job equivalent to the one lost without undergoing financial distress.
Unemployment compensation for United States workers was first established in the federal Social Security Act of 1935 in response to the Great Depression of the 1930s. The benefits received by qualified individuals are funded by payments made by employers and collected at the federal level. The money is dispersed to the states and then administered according to their own programs, with payouts varying from state to state.
According to the guidelines established by Federal law, each state administers unemployment insurance programs. Although the rules vary from state to state, generally, to qualify to receive benefits, you must be a United States citizen, meet your state’s requirements for wages earned or time worked during a specified period of time and must be unemployed through no fault of your own. If you are terminated for misconduct, your employer may challenge your right to receive benefits. Thus, your ability to collect unemployment will typically depend on why you were terminated.
Employee quits. An employee that leaves voluntarily is typically ineligible for UI, unless they can prove it was for good cause. Thus, in the event that you decide to quit for a compelling reason, you will be eligible for UI compensation. Most states define good cause as a condition that would cause you to suffer some type of injury or harm if you decided to continue working for that employer. Legally, the standard of proof is whether a reasonable person in that job position would have decided to stay at the job or not. If your employer was merely experiencing financial problems, you will likely be able to recover compensation. If you were terminated for misconduct, your eligibility will generally depend on the seriousness of the infraction. Actions involving fraud, embezzlement or misuse/misappropriation of company property will probably exclude you from coverage, but minor or unintentional infractions will likely not be dispositive.
Likewise, if you voluntarily resign, you may face difficulties obtaining compensation. Most states, however, recognize that there may be circumstances where employees have voluntarily quit because of untenable conditions at work. You may be able to get unemployment compensation if you can show that you voluntarily left because of:
Employee is laid off. Employees who lose work through no fault of their own (e.g. their employer engages in a mass reduction-in-force or their work site closes) are eligible for unemployment compensation.
Employee is fired. An employee who is fired may or may not be able to receive UI, depending on the reason for the firing. State law defines which causes of termination render an employee ineligible to receive UI. For instance, an employee who is let go because of poor work performance may be eligible for UI while an employee who violates workplace safety rules may not. Other actions that may prevent an employee from receiving unemployment compensation include committing a crime, failing a drug test, or engaging in any kind of workplace-related misconduct (e.g. stealing from the employer, fighting in the workplace, or even being insubordinate). An employee may be disqualified from receiving UI if that employee is offered, and turns down, another comparable position after being fired.
In every state, your initial application for benefits is filed through a state agency. The agency will make the initial determination of eligibility. Based on that determination, either you or your employer may file a dispute. The agency may resolve the dispute without a hearing, or may convene a hearing with an agency referee, where either party can bring in witnesses, and introduce evidence. The referee will then make a ruling on eligibility. Either party can appeal the ruling to an administrative agency.
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