To understand how Unemployment Compensation operates one must first comprehend the make up of unemployment programs and the regulations. A through background and the progression of the law over time supply the means to apply the developments to current employment, or in this case, lack of employment situations. Upon examination of the factors that transformed the ideas into requirements, one can gain awareness of program availability. The outline of unemployment compensation comes from the federal level while individual states direct the details of the program.
The Social Security Act of 1935 marked the institution of the Federal-State Unemployment Compensation (UC) Program. All states have unemployment payment programs designed to supply unemployed workers with short-term financial assistance. The goals of the plan are to: 1) offer provisional and/or partial income replacement to those recently unemployed involuntarily; and 2) to give constancy during economic downturns. The U.S. Department of Labor oversees the plan with each state managing its own plan.
The Federal Unemployment Tax Act (FUTA) of 1939 coupled with The Social Security Act forms the guidelines for unemployment compensation (Unemployment Compensation, n.d. para.1).
The Federal Unemployment Tax Act of 1939 permits the Internal Revenue Service to collect a federal employer tax for use in funding unemployment programs. Additionally, half of the extended benefits cost financing comes from FUTA. FUTA enforces 6.2% tax rate on the first $7,000 paid in by employers per employee. Each state has a federally approved program allowing for a 5.4% credit, hereby taking the minimum tax amount to 0.8%. States qualify for this credit only if that state does not have outstanding Federal loan balances.
Unemployed workers must meet the criteria for benefits generally based on time paid in at covered employer as well as earned a certain amount of pay. Recipients may receive unemployment benefits for...