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Quick reference guide to unemployment compensation
August 2002Unemployment compensation originated as part of the Social Security Act and became effective in 1935. Its major objective was to make benefits available to workers who became unemployed through no fault of their own.
Organization
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.
Funding
Unemployment compensation is financed entirely by a tax on employers, not by the employee or the state agency. (Exception: New Jersey and Alaska currently assess a token tax on employees.)Who can collect
- 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.
Payment
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.