Unemployment - how does it work and who pays?

[apetaster]

Given the challenging economic times, I'm hearing more and more of folks who have started collecting unemployment on my company, and that got me wondering - how does the system work (who funds it directly/indirectly, what tax monies go towards it, and if you work for a corporation and get severance pay, do you have to sign away the right to claiming unemployment?)

Thanks

[Liquor Dealer]

Originally posted by apetaster
Given the challenging economic times, I'm hearing more and more of folks who have started collecting unemployment on my company, and that got me wondering - how does the system work (who funds it directly/indirectly, what tax monies go towards it, and if you work for a corporation and get severance pay, do you have to sign away the right to claiming unemployment?)

Thanks

I don't know how it works in your state but I pay a percentage on the wages I pay out to the state unemployment fund. The percentage varies based on the employer's past history. Past that point I can't help much - I've never collected unemployment and so far have never had to pay any out. I have had a couple of people file on me but it has been denied. I'm not sure of the exact rules but if you fire an employee for dishonesty or something along that line you do not have to pay.

[Orionath]

Depends on the state, but in general employers all pay into a fund, a percentage of their total payroll. The percentage is typically based on claims experience. The employee receives benefits as a percentage of their average wage as calculated over some time period called a "base year" (which usually does not include the most recent quarter). Your state Unemployment division will have their rules on their website.

[Divine69]

depends on the state you live in.My hubby is collecting now; a company has to pay if you have been laid off but if you are fired they can give a reason why u can't. your local website should tell ya.

[The_Dude]

yes, employers are responsible for paying a set rate for 'federal unemployement tax' or FUTA.

here in texas, employers also have to pay a state unemp tax, aka SUTA.

i think that the fed govt has a limit on how much this tax can be, and the feds always set this below the level. so the state unemp tax makes up for the rest of the limit.

anyway, that's what i learned from accounting in high school

[Sensei]

FYI: Europe has ridiculously generous unemployment benefits programs. I believe the average length in the US is nine months whereas in parts of Europe you are allowed to collect for more than four years. Also, Europe may pay up to 80% of previous salary why in the US the rate (I believe) hovers around 50%.

[Cynthetiq]

The employer pays into the Unemployment insurance fund as do you when you are working. The last employer (the one that fired/laid you off) pays the lion's share of the premium.

You also are responsible for income taxes that need to be paid on the monies you receive. You can request enough withholding for federal but you'll need to increase it to cover the state taxes.

[awanderingsoul]

So...anyone know how much unemployment pays? Is it a percentage of your previous salary? Do you have to prove what your salary was? If you own your own business that fails, can you claim unemployment?

[hrdwareguy]

As The_Dude said, there is Federal Unemployment and State Unemployment.

Federal Unemployment is based on the first 7000.00 each employee makes and is generally taxed at 0.8%. This is paid by the employer.

State Unemployment varies by state. Usually it is greater than the 7000 FUTA amount. For example, California is 7000.00, but Hawaii is 29,300.00. The percent you pay is based on previous payroll and claims. This is paid by the employer. A couple states such as New Jersey, have employee paid Unemployment, this means that a portion of unemployment is paid by the employer and a portion is witheld from the employees check.

I believe unemployment is paid as a percentage of your previous pay. When you apply for unemployment, the unemployment office will contact your previous employer and find out why you are now unemployeed. If you didn't do anything wrong, just laid off or somehting like that, you will get unemployment.

As for your own failed business, I don't know. Best bet is to contact your local unemployment office and ask them.

[seretogis]

Unemployment didn't work for me. I've paid in thousands of dollars, and when I filed for unemployment after I was laid off by a_large_marketing_corp_038, they denied my claim and there was little I could do about it after my appeal was shot down. I've had a fulltime job every day since a week after I graduated high school, but a_large_marketing_corp_038 wanted to save a few bucks so *slam* no unemployment. The same thing happened to a couple of other former-coworkers of mine, at the same company.