Are Employers Required To Pay Unemployment Insurance
Understanding how unemployment claims are funded helps businesses keep costs down. Many people assume that employees pay into the unemployment system. However, only three states, Alaska, New Jersey, and Pennsylvania, require employees to contribute. For everyone else, unemployment insurance funds come from state and federal taxes that businesses pay as part of their payroll taxes.
Employers in every state pay Federal Unemployment Tax Act taxes. This is a 6% federal payroll tax on the first $7,000 each employee earns in a calendar year. Thus, the maximum employers pay $420 per employee. However, after claiming a tax credit of 5.4%, the effective FUTA tax rate decreases to 0.6%. That means a maximum tax of $42 per worker applies each year.
Payments to FUTA finance the federal unemployment insurance trust fund. The UI fund covers the cost of administering unemployment insurance programs and the loans made to state UI funds. It also splits the cost of extended unemployment benefits offered during periods of high unemployment.
Because of the coronavirus pandemic, the federal government launched programs to protect the economy and unemployed workers. These laws expanded eligibility and extended benefit duration. In addition, the weekly benefit amount increased. Still, some programs ended in 2020. All remaining expanded benefits will phase out completely by August 31, 2021. The federal government funded these enhanced unemployment programs.
What Are The Unemployment Qualifications In Indiana
To qualify for unemployment benefits in Indiana, you must meet several qualifications before being granted unemployment payments. There are three specific requirements mandated by the Indiana unemployment department that impact whether or not you qualify for unemployment:
Requirement #1: You are able to work.
Indiana unemployment laws require you to be able to find new work before you can receive benefits.
- You must be able to work.
- You must be available to work.
- You must be actively searching for a full-time job.
Requirement #2: You lost your job through no fault of your own.
- Did you quit your job voluntarily? If so, and your reason for quitting was not work-related, you cannot receive benefits. Work-related reasons for quitting that still allow you to qualify for unemployment benefits include the following:
- Worksite safety violations
- Unreasonable changes to your work duties or conditions
- Military service
- Moving to follow a spouse who has accepted a new job
- Harassment, family violence, or domestic abuse
Requirement #3: You earned enough during your base period.
For your claim to be valid, you must have earned at least 1.5 times the amount of your highest-quarter wages in your base period and have made at least $2,500 in the final six months of that period.
I Was Furloughed By My Employer But They Have Now Reopened And Asked Me To Return To My Job Can I Remain On Unemployment
No. As a general matter, individuals receiving regular unemployment compensation must act upon any referral to suitable employment and must accept any offer of suitable employment. Barring unusual circumstances, a request that a furloughed employee return to his or her job very likely constitutes an offer of suitable employment that the employee must accept.
While eligibility for PUA does not turn on whether an individual is actively seeking work, it does require that the individual be unemployed, partially employed, or unable or unavailable to work due to certain circumstances that are a direct result of COVID-19 or the COVID-19 public health emergency. In the situation outlined here, an employee who had been furloughed because his or her employer has closed the place of employment would potentially be eligible for PUA while the employer remained closed, assuming the closure was a direct result of the COVID-19 public health emergency and other qualifying conditions are satisfied. However, as soon as the business reopens and the employee is recalled for work, as in the example above, eligibility for PUA would cease unless the individual could identify some other qualifying circumstance outlined in the CARES Act.
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How Severance Pay Affects Unemployment
Different states have different policies regarding severance, and whether your payment will affect unemployment benefits depends on state law.
For example, receiving severance pay does not impact your benefits in California, even if you receive it in a lump sum instead of in regular installments like a paycheck.
You need to report the amount you receive, and pay taxes on it as you would any other income, but it will not be deducted from your unemployment compensation.
In New York, if you continue to receive the exact same benefits you received while working, you would not be eligible for unemploymentin most cases. You might be eligible to claim unemployment benefits if your weekly severance pay is less than the maximum weekly unemployment insurance rate.
In Texas, severance may delay or stop receipt of unemployment benefits, and payments will be delayed until the payment’s period of coverage has expired.
Because state laws and individual circumstances vary, check with your state department of labor for the rules that determine if you qualify.
Even if severance is not deducted from unemployment benefits, you are required to report it when you file a claim.
Unemployment Claims And Worker Misclassification
Bigger issues could come to light during unemployment claim processes. Again, independent contractors are not eligible for unemployment benefits
But, what if you misclassified the worker as an independent contractor when they really should have been an employee?
When you misclassify an employee as an independent contractor, you deny them the option of enrolling in benefits programs, like health insurance and retirement plans. And, you fail to provide overtime wages and withhold and contribute necessary payroll taxes.
Misclassifying workers results in penalties, interest, and back taxes. States require you to pay back payments for unemployment insurance and workers compensation premiums.
Avoid misclassifying workers by understanding the difference between an independent contractor and employee.
Make sure you contribute federal and state unemployment taxes for each employee. Patriots payroll software will accurately calculate your tax liability. And if you opt for our Full Service payroll services, we will deposit and file taxes on your behalf. Get your free trial today!
This article has been updated from its original publication date of June 4, 2018.
This is not intended as legal advice for more information, please
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How To File Your Taxes If You Received Unemployment Benefits In 2021
If you received unemployment benefits, you’ll owe income taxes on those benefits.
When tax season approaches, many Americans will face the prospect of filing their income taxes. For millions of people, this will include their unemployment benefits.
Knowing how to file correctly will help you avoid a lot of trouble with the IRS. Let’s take a look.
Is There A Way To Shield Settlement Monies From Ei
Yes, if your settlement with your employer was for general damages, not pay in lieu of notice or severance, then you dont have to pay back EI. This is because general damages are not income. They are not earnings much like winning a lottery ticket is not earnings.
What are general damages? Read here about general damages. In short, general damages are money your employer has to pay you because of the way it treated you, not money it has to pay you for terminating you, which is money called many things like notice, pay in lieu of notice, severance or wrongful dismissal damages, but they are all the same thing, essentially: earnings.
Beware of simply classifying severance as general damages. The CRA may examine your claims. There must be some legitimate nexus regarding the general damages, such as a human rights lawsuit or a lawsuit for punitive damages. However, there does not need to be a final verdict, the parties can settle and refer to a portion of the settlement as general damages. Speak to a lawyer about this as it is quite complicated.
Dutton Employment Law is an employment law group in Toronto at Monkhouse Law. We assist employees and employers in severance and wrongful dismissal. Contact us.
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Where Do I File For Unemployment Insurance
Unemployment insurance is a joint state-federal program that provides cash benefits to eligible workers. Each state administers a separate unemployment insurance program, but all states follow the same guidelines established by federal law.
Please see the map and list below to find the contact information for your state in order to apply for Unemployment Benefits.
What To Watch Out For
- You may pay a fee to cash your check if you dont do so at your bank
- Once deposited, it might take a few days before all your money is available for use
Remember, checks can take a few days to arrive so this may not be the best option if you need funds quickly. If you have your own bank or credit union account or prepaid card, you may be able to use a mobile banking app to capture an image of the check and have it deposited into these personal accounts. Otherwise, you may need to make a trip to a financial institution to cash or deposit it, but be aware that it may take a few days until all the money appears in your account and is available for you to use.
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Hear From The Experts
Q: What advice do you have for folks navigating unemployment right now?
A: One advice I would give is to think hard if your job is coming back, once the pandemic is over. We live in times when economies are very dynamic, and one needs to be flexible in meeting the demand for labor. It might not be a bad idea to learn some new tasks/skills at the local community college while being unemployed.
Dr. Miren Ivankovic, Adjunct Professor of Economics, Clemson University
Q: How would you advise that people adjust their plans about work during the current reality?
A: The bad news is that the nature of work is rapidly changing, many industries and jobs will never be the same, and will put enormous stress on workers who will be forced to adapt. The good news is that there are more options than ever to do so. Massively Open Online Courses like Coursera, edX, and Udacity offer cheap, flexible, bite-sized courses that can help supplement your current skills with those most needed as the working world evolves. Universities in general, and business schools in particular, increasingly offer high-quality, flexible, specialized degrees that can help you make a bigger transition.
Dr. Alan Benson, Assistant Professor, Department of Work and Organizations, University of Minnesota
About the author:
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Direct Deposit To Your Own Bank Account Or Prepaid Card
Similar to how you may have used direct deposit to receive your paycheck, you can have your money automatically sent to your checking or savings account or a prepaid card that you already own.
What you need to know
- Benefits go directly to your own bank or credit union account or prepaid card
- Access your benefits same as you already do with other money in that account
- Benefits are sent to your account for free
What to watch out for
- Look closely for this option when filling out unemployment forms
- People without their own bank account or prepaid card must open one to take advantage of this option
With direct deposit, you receive your money quickly and safely, and you can manage your unemployment benefits just like any other funds in your account. It also eliminates the risk of paper checks getting lost or stolen, as well as the need to physically deposit or cash it at a bank or credit union.
If you prefer to use a prepaid card, direct deposit is generally an option, but youll want to check first with your card provider to find out if your card is eligible to receive direct deposit. If you dont already have a bank or credit union account or prepaid card, youd need to open a new account first, which many financial institutions are allowing you to do online.
No matter what state you live in, the following information is typically whats required for signing up:
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How To File A Claim For Unemployment Benefits In Indiana
The Indiana Department of Workforce Development administers unemployment benefits. You may file your claim for unemployment benefits electronically or by phone. You can find contact information and online filing information at the website of the Indiana Department of Workforce Development.
Once the DWD receives your application, it will send you a Wage Transcript and Benefit Computation, followed by a Determination of Eligibility. Together, these documents will let you know whether you qualify for benefits and how much you will receive each week.
Employer Liability For Unemployment Taxes
In order to fund unemployment compensation benefit programs, employers are subject to federal and state unemployment taxes depending on several factors. These factors include the sums employers pay their employees, the unemployment claims filed against the business, and the type & age of the business.
Employers must pay federal and state unemployment taxes so as to fund the unemployment tax system. Unemployment compensation is intended to pay benefits to workers when they are laid off through no fault of their own.
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What’s The Minimum Amount I Can Get
Again, this varies by state. But the new law raises the minimum payment significantly.
The law sets a minimum of half the state’s average weekly payment. When added to the $600-a-week supplement, the nationwide average would be about $789 a week.
In Massachusetts, the most generous state, an unemployed person can expect to collect at least $878 a week. Mississippi would offer the lowest benefit among other states $707 a week, which is still an increase of more than 2,200% from its prior minimum of $30.
I Am An Independent Contractor Am I Eligible For Unemployment Benefits Under The Cares Act
You may be eligible for unemployment benefits, depending on your personal circumstances and how your state chooses to implement the CARES Act. States are permitted to provide Pandemic Unemployment Assistance to individuals who are self-employed, seeking part-time employment, or who otherwise would not qualify for regular unemployment compensation. To qualify for PUA benefits, you must not be eligible for regular unemployment benefits and be unemployed, partially unemployed, or unable or unavailable to work because of certain health or economic consequences of the COVID-19 pandemic.
The PUA program provides up to 39 weeks of benefits, which are available retroactively starting with weeks of unemployment beginning on or after January 27, 2020, and ending on or before December 31, 2020. The amount of benefits paid out will vary by state and are calculated based on the weekly benefit amounts provided under a states unemployment insurance laws. Under the CARES Act, the WBA may be supplemented by the additional unemployment assistance provided under the Act.
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Are You Out Of Work Through No Fault Of Your Own
You must be out of work through no fault of your own to qualify for unemployment benefits in Indiana.
Collecting Unemployment After a Layoff
If you were laid off, lost your job in a reduction-in-force , or got “downsized” for economic reasons, you will meet this requirement.
Collecting Unemployment After Being Fired
If you were fired because you lacked the skills to perform the job or simply weren’t a good fit, you won’t necessarily be barred from receiving benefits. If you were fired for good cause, however, you will be disqualified from receiving benefits. For example, if you were fired for coming to work intoxicated, committing a crime, falsifying your job application, knowingly breaking workplace rules, or intentionally damaging the employer’s property, you will not be eligible for benefits.
Collecting Unemployment After Quitting
If you voluntarily quit your job, you won’t be eligible for unemployment benefits unless you had good cause. In general, good cause means that you had a work-related reason that was so compelling that you had no other choice than to leave. For example, if you left your job because of dangerous working conditions, sexual harassment, or your employer’s failure to pay you, you may be able to collect benefits.
Other Unemployment Insurance Provisions Under The Cares Act:
The CARES Act improved unemployment benefits in the following ways:
- It provides an additional $600 per week in benefits and payments through July 31, 2020.
- It adds an additional 13 weeks of benefits through December 31, 2020. Most states currently offer 26 weeks of unemployment benefits .
- it expands benefits for part-time, seasonal, self-employed, and contract workers .
- Offers to reimburse the cost for states that waive the one-week waiting period before paying benefits.
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Pandemic Emergency Unemployment Compensation
What is Pandemic Emergency Unemployment Compensation ?
PEUC is a federal Continued Assistance Act program that extends benefits to those who have exhausted state unemployment benefits. This benefit ended September 4, 2021.
What does it mean to exhaust state unemployment benefits?
A person exhausts state unemployment benefits when he or she either draws all available benefits that could be paid, or reaches the end of the benefit year and is not monetarily eligible for a new benefit year. Also, the individual cannot be eligible to file a claim in any other state.
How long does PEUC run?
Under the March 2020 CARES Act, the PEUC extension program allowed an additional 13 weeks of benefits and the program expired on December 26, 2020. The Continued Assistance Act extended this program to expire the week ending March 13, 2021. Under the new American Rescue Plan Act of 2021 , the PEUC program expired the week ending September 4, 2021.
How do I apply for PEUC?
Once your state unemployment claim has a zero balance, you can apply for PEUC on our website at www.GetKansasBenefits.gov.
PEUC applications can only be filed online at this time.
Do I have to apply for the extension provided under the new ARP Act?
No. If you were previously filing for PEUC benefits, you do not have to file a new application for the additional weeks. You just need to continue filing weekly claims each week you are unemployed.
How much does PEUC pay each week?
PEUC is available for the following periods:
