Base on the information below Explain the criteria that must be met before receiving unemployment insurance benefits

Unemployment Insurance

The national federalstate unemployment insurance program provides weekly income to individuals who become unemployed through no fault of their own. Each state administers its own program and develops guidelines within parameters set by the federal government. States pay into a central unemployment tax fund administered by the federal government, which then invests these payments and disburses funds to the states as needed

Eligibility Criteria for Unemployment Insurance Benefit

Individuals must meet several criteria to qualify for unemployment benefits. Unemployment itself does not necessarily qualify an individual for these benefits, although this criterion varies somewhat by state. In general, unemployed workers must meet several eligibility criteria, including: Limited voluntary employment, and involuntary unemployment except for disqualifying causes. Minimum earnings and employment requirements. A waiting period in most states. A capacity to work and an availability for work. An active seeking of suitable work. Limited Voluntary Employment and Involuntary Unemployment Workers who become unemployed through no fault of their own are eligible to receive unemployment insurance. Specifically, voluntary termination usually disqualifies workers from receiving unemployment insurance benefits unless they chose to quit their jobs for reasonable cause. Reasonable cause refers to the creation of working conditions that cannot be tolerated by any sensible person. Involuntary termination does not guarantee eligibility for benefits; most states stipulate disqualifying events. These include termination for misconduct, refusal of suitable work, and participation in some labor disputes. Some states will pay benefits for participation in labor disputes that result from a lockout by the employer or if the employer violates the terms of either a contract or labor laws. Additional disqualifying events include regular breaks between school terms for educators and deliberate misrepresentation used to receive benefits. Minimum Earnings and Employment Requirements Every state requires an employee to have sufficient earnings or to have worked at least a specified minimum period of time. The minimum employment period to qualify for unemployment insurance benefits is the base period. Many states require both a minimum earnings amount and fulfillment of a designated base period. The three most common methods are multiple of high-quarter wages, multiple of weekly benefit amount, and flat qualifying amount. These methods will be described next, and the descriptions are based on the U.S. federal government's Congressional Research Service.13 Multiple of High-Quarter Wages Under this method, workers are required to earn a certain dollar amount in the calendar quarter (consecutive three-month period) with the highest earnings of their base period. In addition, workers must earn total base period wages that are a multipletypically 1.5of the high-quarter wages. For example, in Arizona, mar12281_ch07_191-216.indd 210 12/8/16 7:00 AM Chapter 7Government-Mandated Social Security Programs211 the base period is first four of the last five completed calendar quarters before filing a claim for unemployment insurance benefits. If a worker earns $5,000 in the high quarter, the worker must earn at least another $2,500 in the rest of the base period. Multiple of Weekly Benefit Amount Under this method, the state first computes the workers weekly benefit amount. The worker must have earned a multipleoften 40of this amount during the base period. For example, if a workers weekly benefit amount equals $100, then the worker will need base period earnings of 40 times $100, or $4,000, before any unemployment insurance benefit would be paid. In Texas, the multiple is 37 times of the weekly benefit amount. Most states also require wages in at least two calendar quarters. Some states have weighted schedules that require varying multiples for varying weekly benefits. Some states allow a reduced weekly benefit amount to meet the multiple requirement. Flat Qualifying Amount States using this method require a certain dollar amount of total wages to be earned during the base period. This method is used by most states with an annual-wage requirement for determining the weekly benefit. Illinois amount is $1,600. Also, this approach is used by some states with a high-quarter wage/weekly benefit requirement such as Oregon. Waiting Period Most states impose a waiting period, usually one week following submission of a claim, prior to paying benefits. States impose waiting periods for a variety of reasons, including time needed to process claims. Other states use waiting periods to limit total costs. Aggregating a weeks worth of benefits over the total number of eligible individuals adds up to substantial amounts. Capacity to Work and Availability for Work Unemployed workers must be mentally and physically capable of performing work. Availability for work refers to a persons willingness and readiness to work. The former requirement can be thought of as ability, and the latter as motivation. Actively Seeking Suitable Work Unemployed workers must demonstrate that they are actively seeking work. The requirements vary by state. Usually, going on job interviews provides sufficient evidence. The term suitable work contains two elements. First, suitable work refers to jobs that require skills, knowledge, and ability similar to a persons customary work. Second, suitable work offers employment terms and conditions that do not violate relevant laws (e.g., violation of the minimum wage requirement of the Fair Labor Standards Act of 1938). mar12281_ch07_191-216.indd 211 12/8/16 7:00 AM 212 Part TwoRetirement, Health Care, and Life Insurance Unemployment Insurance Benefit Amounts Individuals who meet the eligibility criteria receive weekly benefits. Because the federal government places no limits on a maximum allowable amount, the benefit amount varies widely from state to state. Most states calculate the weekly benefits as a specified fraction of an employees average wages during the highest calendar quarter of the base period. Most unemployment insurance programs provide benefits that amount to 50 to 67 percent of previous earnings. The calculation typically excludes some income, including holidays, vacation, back pay, workers compensation, and retirement earned from another employer. States use one of three methods to calculate weekly benefit amounts (WBAs): A fraction of the highest wages for a calendar quarter earned during the base period. A percentage of the average weekly wage earned during the base period. A percentage of annual wages. States determine WBAs subject to minimum and maximum amounts. For example, Hawaiis minimum WBA was $5 in 2015, which was the lowest amount. Massachusetts WBA was $698, representing the highest in the nation. Duration of Unemployment Insurance Benefits The federal government took extra steps to temporally extend the duration of unemployment insurance benefits during the deep economic recession that began in late 2007. During that time, millions of jobs left several millions of newly unemployed workers unable to secure work within the scope of state unemployment insurance programs. As a result, Congress approved the Emergency Unemployment Insurance (EUC) program in June 2008 in the Supplemental Appropriations Act of 2008. The EUC program provided 13 additional weeks of federally funded unemployment insurance benefits to unemployed workers who had exhausted all state unemployment insurance benefits for which they were eligible. As the economic recession deepened, particularly in states such as Michigan and Nevada where unemployment rates were about 15 percent, it became apparent to the federal government that the EUC program extensions were not sufficient to bridge the lengthening gap between periods of employment. In response, Congress enacted the Unemployment Compensation Act of 2008 on November 21, 2008. This law expanded the EUC benefits to 20 weeks nationwide (from 13 weeks), and it provided for 13 more weeks of EUC. The EUC expired at the end of 2013. Unemployment insurance benefits information for each of the 50 states and U.S. territories, including Puerto Rico and the Virgin Islands, may be obtained from the U.S. Department of Labor Web site (www.workforcesecurity .doleta.gov). Financing Unemployment Insurance Benefits Unemployment insurance benefits are financed by federal and, sometimes, state taxes levied on employers. Federal tax is levied on employers under the Federal Unemployment Tax Act (FUTA). 14 Employer contributions amount to 6.2 percent mar12281_ch07_191-216.indd 212 12/8/16 7:00 AM Chapter 7Government-Mandated Social Security Programs213 of the first $7,000 earned by each employee (i.e., the taxable wage base). FUTA specifies $7,000 as the minimum allowable taxable wage base. Relatively few states taxable wage bases are as low as the FUTA-specified minimum. States typically set the taxable wage base according to the average wage level. In 2015, states taxable wage bases ranged from $7,000, in Arizona and California, to $40,900 in Hawaii. The federal government deposits 5.4 percent of the taxes levied on employers to the Federal Unemployment Trust Fund, which is administered by the Treasury Department. The Treasury Department invests this money in government securities, crediting the principal amount contributed by each state and investment income to an account. The federal government retains 0.8 percent to cover administrative costs and to maintain a reserve to bail out states with very low balances in their accounts. States also impose taxes on employers to fund their unemployment insurance programs permitted by state unemployment tax acts (SUTA taxes). The state unemployment employer tax rate varies according to an experience rating system. Every state applies different tax rates to companies, subject to statutory minimum and maximum rates. In 2015, Iowas SUTA rate ranged between 0 and 7.50 percent. Wisconsins rate ranged between 0.27 and 12 percent, representing the highest state rate at the time. Each companys tax rate depends upon its prior experience with unemployment. Accordingly, a company that lays off a large percentage of employees will have a higher tax rate than a company that lays off relatively few or none of its employees.