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