Unemployment insurance is administered through state programs. Its purpose is to provide income to employees who are temporarily involuntarily unemployed. Each employer in the United States is required to pay for unemployment insurance on each employee. The payments then go into a state fund that is used to pay unemployment compensation to eligible workers. Not every unemployed worker is eligible for compensation, however.

Eligibility Requirements

The exact eligibility requirements for unemployment insurance vary between states. In general, however, there are four major criteria: minimum length of employment at previous employer; registered with state employment agency; actively seeking work; actively available for work.

Most states allow those on unemployment to turn down job offers that are “not suitable.” However, the definition of suitability varies widely. Some states allow job seekers to search only for jobs that are similar in pay range, working conditions and skill set to their previous employment, while other states have more limited definitions.

Length and Pay Rate of Unemployment Compensation

Unemployment benefits are normally paid for a maximum of 26 weeks. However, in economic downturns benefits may be extended. The pay rate is generally 50 percent of previous wages, but is subject to a cap. Due to the cap, some workers receive much less than 50 percent of their previous paycheck.

Can Employees Collect if They Were Fired for Cause or Left Voluntarily?

If the employee was terminated due to his own misconduct, he may or may not be eligible for unemployment compensation. State laws vary widely on this issue. In general, however, a fired employee may be eligible for compensation if his infractions were minor or unintentional. In some states, misconduct may disqualify an employee from receiving unemployment insurance benefits for a period of time, after which benefits will go into effect.

If the employee leaves the job for personal reasons, he is not normally entitled to unemployment compensation. However, if the employee quits due to a serious and irresolvable work-related issue, he may be eligible for unemployment. The standard applied is generally whether a reasonable person would have continued the employment under the circumstances. Some states also allow workers to gain unemployment compensation if they left for compelling personal reasons, such as caring for a sick relative or following a spouse to another state.

Filing a Claim

The employee must apply for unemployment at the state employment agency. The employer is entitled to contest the employee’s claim. The agency will make an initial ruling on eligibility. Either the employer or employee may appeal the decision in an escalating process. The final stage of appeal is the state court system.

It is important for both employers and former employees to keep scrupulous written records regarding the termination. An employee will probably not need to retain an attorney in order to file an initial claim. If the claim is denied or contested, however, then it may be best to consult a lawyer who specializes in unemployment law. Unemployment laws vary from state to state, and a qualified attorney in the relevant state is best equipped to give specific advice about a particular case.