Transcript unemployment insurance

Unemployment Insurance
MGMT 4030 - Managing Employee Reward Systems
Unemployment Insurance:
Purpose
Partial Replacement Income for Unemployed
Workers
 Maintain Buying Power to Stabilize Economy
 States Allocate Unemployment Insurance
(UI) Payments
 UI Tax Paid By Employer Only

Funding of UI
Tax Rate Averages 6.2 % of first $7000 of
Earnings
 Federal Government Receives 0.8%
 Taxes Are Experience Rated for State Fund
 Can Range from 0% to 10% for States

UI Benefits
Cover Basic Living Costs
 Usually Less than 50% of Lost Earnings

– Much less for higher income levels
Provides Incentive to Return to Work
 Benefits Last for 26 Weeks

– possible extension for 13 week periods if high
unemployment in local region

Average Benefit - Aprox. $115/week
Eligibility for UI
Available and Actively Seeking Employment
 Work a Minimum of 4 out of 5 Quarter Year
Periods
 Earn a Minimum of $1000 During Combined
Periods
 Employee Left Job Involuntarily

Disqualification for UI Benefits

Voluntary Quit - Except for Good Cause
– Ex: Sexual harassment, hostile work environment

Discharge for Gross Misconduct
– Ex: Theft, drug use, dishonesty
Employee Turns Down a Comparable Job
 Employee Participates in a Strike
– Strikers may receive strike benefits from
union

Managing the UI Costs

Human Resource Planning
– retraining, flexible pay systems, or use of
severance pay which precludes use of UI benefits.
Consider Temps or Consultants for Short
Term Work - buffers the jobs of full-time
employees.
 Conduct Exit Interviews With Discharged
Employees - make them aware of intentions
of a claim challenge if not eligible for UI.
 Audit All UI Claims and Challenge
Questionable Ones

Critical Thinking Questions: Is
Employee Eligible for UI Benefits?
1. Employee’s health requires that he quit job
temporarily.
2. Worker is discharged for being incompetent
due to lack of training or education.
3. Employee Refuses to work a different shift
or overtime without a good cause.
4. Incarceration after violating any law.
5. Treatment for alcoholism or drug addiction.
6. Lack of transportation to the job.
7. Quitting to marry and follow spouse to
location.