Unemployment Compensation

In general, only workers who involuntarily leave their jobs are eligible for unemployment compensation. But that doesn't mean someone who quits won't file a claim. Such people can allege that they were forced out due to illegal or discriminatory practices, or they may misrepresent the circumstances under which they left.

The benefits paid to jobless workers are financed through federal and state unemployment taxes paid by employers like you. Every state imposes unemployment tax at a rate based on the amount of benefits that has been paid to your former workers. Therefore, you can lower your unemployment tax rate if you fire or lay off workers only when absolutely necessary, and use the proper procedures to do it. You should also routinely contest unemployment benefit claims when you think the worker is ineligible. In some states, you can lower your rate to zero, and pay no unemployment taxes at all. On the other hand, if you don't pay attention to these things, you may well find your unemployment taxes eating into your bottom line. To stay on top of the system, you need to know who’s eligible for unemployment benefits and what actions can disqualify an otherwise eligible worker.

There are a few other requirements that must be met before someone is eligible for unemployment benefits. If you think an ex-employee doesn't satisfy these requirements, consider contesting the payment of benefits.

Some people otherwise eligible for benefits can still be disqualified from receiving benefits, based on how and why they lost their jobs. Generally, unemployment benefits are designed for people who are laid off because the employer doesn't have enough work for them, or who lose their jobs because of something the employer did wrong. So, workers will be disqualified if: