The Federal Unemployment Tax Act (FUTA) was enacted by Congress as part of the Social Security Act of 1935 and was intended to meet the needs of workers unemployed as a result of the Great Depression. FUTA was designed to encourage states to enact unemployment insurance programs by creating a system of federal monetary incentives for doing so. Every state, the District of Columbia, Puerto Rico and the U.S. Virgin Islands has enacted unemployment insurance programs.
WHO ADMINISTERS THE PROGRAM
The federal government, the U.S. Department of Labor, and the Employment & Training Administration, sets broad guidelines for coverage. Individual states have broad discretion, within the parameters set by federal law, in how the state raises contributions for the benefit, how the benefit is administered, eligibility guidelines, the benefit amount, and application procedures.
Unemployment insurance is a federal-state program jointly financed through both a federal, as well as a state payroll tax, to employers. FUTA authorizes the Internal Revenue Service (IRS) to collect an annual federal employer tax, which is used to fund state workforce agencies. As originally established, states pay the FUTA to the federal government, no deductions are taken from the workers’ paychecks.
FUTA covers the costs of administering the Unemployment Insurance and Job Service programs in all states. In addition, FUTA pays one-half of the cost of extended unemployment benefits, during periods of high unemployment, and provides for a fund from which states may borrow, if necessary, to pay benefits. All loans must be repaid with interest.
Most employers pay both a federal (FUTA) and a state unemployment tax.
Summary of the Unemployment Insurance Benefit
Unemployment Insurance (UI) is a weekly cash benefit for qualifying individuals who become unemployed through no fault of their own. The maximum period for receiving regular Unemployment Insurance benefits is 26 weeks, although in periods of high unemployment, extended and emergency unemployment benefits may be available.
To be eligible an individual must have employment earnings, be totally unemployed, be unemployed through no fault of his/her own, be available for work, which includes the requirement to be a U.S. citizen or an immigrant who is legally entitled to work in the U.S., be capable of work and be actively seeking work. There are no asset/resource guidelines applicable to UI claimants; neither are there income. However, if an individual engages in work while in receipt of UI benefits, the number of days of work in a week will impact the individual’s benefit amount for that week.
An applicant must wait 7 days after losing employment before applying for UI benefits. That is, before any UI benefits can be paid, an unpaid waiting period equivalent to one full week of unemployment benefits must be served. However, individuals can file up to 12 months after a job loss, if they continue to qualify for UI. Individuals can file an UI claim either from the NYS Department of Labor’s website or by contacting the Telephone Claim Center.
UI claimants must certify weekly to collect their weekly UI benefits.
Other Benefits under the Unemployment Insurance Benefit Program
During the COVID-19 crisis, the federal government has established three emergency UI programs: Pandemic Unemployment Assistance, Pandemic Unemployment Compensation, and Pandemic Unemployment Emergency Compensation. Refer to COVID-19 Resources, Expansion of Unemployment Insurance for more information.
SELF EMPLOYMENT ASSISTANCE PROGRAM
SEAP is a program designed to encourage and enable unemployed workers to create their own jobs by starting their own small businesses. SEAP is available at state option. UI claimants participating in the program work full-time on starting their business instead of looking for wage and salary jobs. Beneficiaries receive the same weekly UI benefit amounts as regular UI benefits. NYS is one of 7 states which have enacted a SEAP program. See below, Additional Benefits, Self Employment Assistance Program (SEAP).
Unemployment Insurance law makes it possible for an individual to receive UI benefits while attending an approved training course or program. While participating in an approved training program, pre-approved UI claimants are excused from the requirement to look for work. In addition, they may be eligible to receive benefits beyond the 26 weeks of regular UI benefits. See below, Additional Benefits, Training.
Dislocated workers are eligible for retraining and other services. See below, Additional Benefits, Dislocated Workers.
TRADE READJUSTMENT ALLOWANCES
Trade Readjustment Allowances are income supports for UI claimants who have exhausted Unemployment Insurance and whose jobs were affected by foreign imports. See below, Additional Benefits, Trade Readjustment Allowance.
DISASTER UNEMPLOYMENT ASSISTANCE
Section 407 of the Disaster Relief Act of 1974 created a program for the payment of Unemployment Insurance to unemployed individuals whose unemployment is a direct result of a major disaster as declared by the President of the United States. See below, Additional Benefits, Disaster Unemployment Assistance.
EMERGENCY UNEMPLOYMENT COMPENSATION
Emergency Unemployment Compensation (EUC) is a federal emergency extension of unemployment insurance that provides additional weeks of unemployment benefits after the state benefits have run out. See below, Additional Benefits, Emergency Unemployment Compensation.
EXTENDED UNEMPLOYMENT BENEFITS
Extended Unemployment Benefits provide unemployment compensation to workers who have exhausted regular state unemployment insurance benefits during periods of high unemployment. There are triggers (calculations are based on the state unemployment rate) that determine when a State will extend benefits. See below, Additional Benefits, Extended Unemployment Benefits.