Chapter 7 - Business Insurance
What You Need to Know About Unemployment Insurance
Protecting Your Employees From Layoffs and Downsizing:
 In addition to helping workers and their families, the Unemployment Insurance programs play a key role in helping businesses, communities, and the nation's economy.
It was created in 1935 in response to the Great Depression, when millions of people lost jobs. They couldn't buy goods and services, which contributed to more layoffs.
What is Unemployment Insurance?
According to the United States Department of Labor: the Federal-State Unemployment Insurance Program provides unemployment benefits to eligible workers who are unemployed through no fault of their own, and meet other eligibility requirements of State law.
These benefits provide temporary assistance to workers who have become unemployed.
Each state determines its own laws regarding the unemployment insurance program within Federal guidelines. States determine:
- Eligibility
- Benefit amounts
- Length of time benefits are available
- For most states, the insurance is funded completely by you, the business owner. Three states (New Hampshire, California, and New York) require a small employee contribution.
Is Your Employee Eligible for unemployment insurance?
 Although different from state to state, every state has requirements an employee must meet.
Typically, an employee has to work a certain period of time and/or earn a certain amount of money during a specified time period called a base period.
Typically, this is 4 out of the last 5 calendar quarters before a claim is filed. Then benefits are determined on a percentage of the employee’s earning over the past year for up to 26 weeks.
Additionally, the employee must be unemployed through no fault of their own.
That means that a layoff or downsizing would give the employee benefits, whereas being fired for cause would not.
Details About Unemeployemnt Insurance You Need To Know About
First you will need to know if you need to pay unemployment taxes. Generally, you must pay the state and federal unemployment taxes if you have:
- Have one employee that works 20 or more hours per week
- Pay quarterly wages of $1500 or more.
You can find out if you are required by law at the US Department of Labor.
Once you’ve determined if you are required to pay the tax, you will need to register with the state.
You will have to set up an unemployment insurance employer account. In many states, businesses must file quarterly wage forms to this account to meet state unemployment insurance requirements.
You may also have to pay the Federal Unemployment Tax Act (FUTA) which is 6.2% of the first $7,000 of each employee’s wages. If, however, you prove that you are paying the state tax, your federal tax will be lessened by as much as 90%.
Remember, that each state administers is own program following federal guidelines. Since each state has different rules, it is important to learn the regulations for your state.
What's Next
Next In This Guide
 Marketing Strategies For Small Businesses - In the simplest of terms, marketing is everything you do to get your business noticed by your customers and gets your customers buying your product or using your service.
Previous In This guide
 The Laws Concerning Workman's Comp - Since it is required by law in most states and for most employees, as a business owner, you will need to understand what it is and how to get it.
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