By Tom Breedlove, Breedlove & Associates
In the last couple of years, most American workers have felt the financial trauma of being unemployed – either personally or through someone close to them. It’s a scary feeling to suddenly find yourself without a job and desperately wondering how you’re going to pay for your next meal.
To help alleviate the financial anxiety of joblessness, each state has established an unemployment system to help workers make ends meet while they look for work. The state systems each utilize a general fund, which is paid for by assessing each employer with a small tax on each dollar of payroll.
When workers get laid off, they are then eligible to make an unemployment claim through a state unemployment office. A case worker reviews each case and verifies the details of the employment and the termination with the former employer in order to determine the amount and duration of the financial benefits. For most workers, it will be 50% of the regular wages for up to 6 months – paid by the general fund.
In order to qualify for unemployment benefits, workers must be laid off due to no fault of their own. Workers who quit or get fired for cause are generally not eligible for benefits. In addition, workers who are paid “off the books” are not eligible because their employer did not make the required tax payments. (If the family catches up on their tax payments, the worker would then become eligible but there would be back taxes, penalties and interest for both the employer and the employee. It is much cheaper to set up payroll correctly from the beginning).
You may have read that your state unemployment fund is broke. While it’s true that quite a few states have not been able to keep up with the record number of unemployment claims during this recession, each state is able to borrow money from the federal unemployment fund. Once the economy rebounds, the unemployment fund will replenish itself through fewer claims and more tax revenue.
Through good times and bad, layoffs happen. Unemployment benefits are the safety net.
For more information about unemployment benefits – or any other aspect of household employment – call us at 1-888-BREEDLOVE (888-273-3356) or visit www.myBreedlove.com.