Unemployment Insurance MGMT 4030 - Managing Employee Reward Systems
Unemployment Insurance: Purpose v Partial Replacement Income for Unemployed Workers v Maintain Buying Power to Stabilize Economy v States Allocate Unemployment Insurance (UI) Payments v UI Tax Paid By Employer Only
Funding of UI v Tax Rate Averages 6.2 % of first $7000 of Earnings v Federal Government Receives 0.8% v Taxes Are Experience Rated for State Fund v Can Range from 0% to 10% for States
UI Benefits v Cover Basic Living Costs v Usually Less than 50% of Lost Earnings –Much less for higher income levels v Provides Incentive to Return to Work v Benefits Last for 26 Weeks –possible extension for 13 week periods if high unemployment in local region v Average Benefit - Aprox. $115/week
Eligibility for UI v Available and Actively Seeking Employment v Work a Minimum of 4 out of 5 Quarter Year Periods v Earn a Minimum of $1000 During Combined Periods v Employee Left Job Involuntarily
Disqualification for UI Benefits v Voluntary Quit - Except for Good Cause –Ex: Sexual harassment, hostile work environment v Discharge for Gross Misconduct –Ex: Theft, drug use, dishonesty v Employee Turns Down a Comparable Job v Employee Participates in a Strike –Strikers may receive strike benefits from union
Managing the UI Costs v Human Resource Planning –retraining, flexible pay systems, or use of severance pay which precludes use of UI benefits. v Consider Temps or Consultants for Short Term Work - buffers the jobs of full-time employees. v Conduct Exit Interviews With Discharged Employees - make them aware of intentions of a claim challenge if not eligible for UI. v 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.