What Is the Federal-State Unemployment Compensation Program?

The federal-state unemployment compensation program provides temporary financial assistance to those who've lost their jobs through no fault of their own. The federal government aids each state in funding and implementing state-sponsored unemployment benefits.

Key Takeaways

  • Federal-state unemployment compensation program helps temporarily out of work individuals who lost their job through no fault of their own.
  • It is available to people who have been laid off due to company restructuring, downsizing or the cessation of operations.
  • 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 benefit periods though it is still based on federal laws.

Understanding Federal-State Unemployment Compensation Program

Federal-State unemployment compensation program is a social safety net that provides temporary financial assistance to workers whose employment has been terminated due to circumstances outside their control. It is most commonly available to people who have been laid off due to company restructuring, downsizing or the cessation of operations.

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 benefit 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.

Initial Claims

Each week claimants will need to file a new claim. There are a series of questions out-of-work individuals must answer before receiving benefits, including:

  • if they worked for any portion of the week
  • if they were actively seeking work
  • 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. Initial claims are an employment report that measures the number of new jobless claims filed by individuals seeking to receive unemployment benefits. The report, published since 1967, also shows how many unemployed individuals qualify for and are receiving benefits under the federal-state unemployment compensation program.

Federal-State Unemployment Compensation Program Example

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.