What is 'Federal-State Unemployment Compensation Program'

The federal-state unemployment compensation program is a social safety net that provides temporary financial assistance to workers whose employment has been terminated through no fault of their own. It is most commonly available to people who have been laid off due to company restructuring, downsizing or the cessation of operations.

BREAKING DOWN 'Federal-State Unemployment Compensation Program'

The federal-state unemployment compensation program is a federal fund, but each state has its own unemployment program with its own qualification guidelines, benefit amounts and periods. The state programs operate based on federal laws. These benefits can sometimes be referred to as unemployment.

Unemployment compensation is also known as unemployment insurance and every employee and employer pays into their state fund as per their state’s requirements.

When an employee’s employment is terminated they must determine if they qualify for unemployment compensation. During times of mass lay-offs, an employer may bring in a liaison to help their employees navigate filing for unemployment. While each state has different requirements and methods, most states will allow claimants to file their initial claim online. They will also need to set up their payments to account for any tax liability they will incur while receiving benefits, and determine how they would like to receive their weekly payments. Some states will allow for direct deposits, while other states may require a paper check be mailed to their residence.

Each week claimants will need to file a new claim. There are a series of questions they must answer including if they worked for any portion of the week, if they were actively seeking work and if they were available for any work that was offered to them. This is to account for time when someone would be unavailable due to being out of town or hospitalized. A claimant may not be eligible for benefits during that period.

The first week of each new claim period is called the waiting week. This is a week in which no benefits are paid out. An individual will experience one waiting week per year.

A normal unemployment time frame is 26 weeks, however congress can extend unemployment benefits for up to 73 weeks, with slight variations by state.

An example of Unemployment Compensation

For an example, Kenny Jones has worked for Money Bank Mortgage for three years. He has been an exemplary employee, but unfortunately Money Bank Mortgage has decided that they are going to consolidate their offices and they close the branch that Kenny works at. Kenny is laid off. Since the job termination happened through no fault of his own, Kenny is eligible for unemployment compensation.

Consider Kenny Jones again. Except this time, Kenny has received several warnings from his bosses at Money Bank Mortgage about his constant tardiness. After his final warning, Kenny’s position with the company is terminated. Kenny is not eligible for unemployment because his position was lost due to a breach in company policy.

  1. Unemployment Compensation

    Unemployment compensation is paid by the state to unemployed ...
  2. Unemployment Income

    Unemployment income is an insurance benefit that is paid as a ...
  3. Unemployment Compensation Amendment ...

    Unemployment Compensation Amendment of 1992 allows a terminated ...
  4. Structural Unemployment

    Structural unemployment is a longer-lasting form of unemployment ...
  5. Cyclical Unemployment

    Cyclical unemployment is a factor of overall unemployment that ...
  6. Continuing Claims

    Continuing claims refers to unemployed workers that qualify for ...
Related Articles
  1. Insights

    The Cost of Unemployment to the Economy

    Unemployment carries many costs, both obvious and hidden, for an economy.
  2. Investing

    How inflation and unemployment are related

    How can inflation affect unemployment, and vice versa? Here, we examine the relationship between wage inflation, consumer prices, and unemployment.
  3. Personal Finance

    Help—my unemployment benefits are running out!

    Don't wait for your unemployment insurance to expire before planning what to do if you haven't found a new job yet.
  4. Insights

    Jobs Beat Forecasts, But "Real" Unemployment Rises

    The "real" unemployment rate, which accounts for discouraged and temporary workers, rose to 9.7% in July from 9.6% the month earlier
  5. Insights

    3 Economic Challenges France in 2019

    France faces three significant economic challenges in 2019: unemployment, lagging competitiveness and sluggish growth.
  6. Trading

    Trading With The Jobless Claims Report

    Introduction to the jobless claims report. This article looks at what jobless claims tell us about the economy's health and how to interpret the data contained in the release.
  7. Investing

    Initial Public Offering (IPO) Explained

    An initial public offering (IPO) marks the start of a company's publicly traded life. Find out why companies undergo IPOs, and how the process works.
  8. Insights

    One in Four Employed Workers Are Looking for a Job

    Job hunting is more productive and lucrative for those who are already employed.
  9. Insights

    Examining The Phillips Curve

    This model depicts an inverse relationship between unemployment and wage inflation, but is it accurate?
  1. What is the difference between frictional unemployment and structural unemployment?

    Learn about structural unemployment and frictional unemployment, the differences between the two and their main characteristics. Read Answer >>
  2. What's the difference between cyclical unemployment and seasonal unemployment?

    Learn about the key differences between cyclical and seasonal unemployment. Read about distinguishing features of each of ... Read Answer >>
  3. What is the key difference between the participation rate and the unemployment rate?

    Learn the key differences between the participation rate and unemployment rate, and how they can provide a clearer picture ... Read Answer >>
  4. Why does unemployment rise during a recession?

    Learn what a recession is, some attributes of an economy in a recession, and why the unemployment rate tends to rise during ... Read Answer >>
Trading Center