Unemployment benefits, also called unemployment insurance (UI), are a program implemented by states to financially support employees who have been laid off or fired. Unemployment benefits seek to support people while they search for new employment. The amount a former employee receives is a percentage of their wages or salary while employed.

Which Employees Are Eligible for Unemployment Benefits?

In general, employees who are unemployed through no fault of their own are eligible for unemployment benefits.

  • Fired Employees: Some employees who are fired may still be eligible for benefits. For example, if an employee is not a good fit for the job or is fired for slight transgressions such as occasional tardiness, he or she may still be eligible for benefits.
  • Laid Off Employees: Employees discharged or temporarily laid off due to workforce reductions or company cut backs are eligible.
  • Employees Who Quit: An employee who quits may still receive unemployment benefits if he or she quit for "good cause" and made efforts to keep his or her employment. Good cause might include unsafe work conditions, quitting on a doctor’s advice, or sexual harassment.

What Will Employment Benefits Cost My Business?

Employers, not employees, pay into their state’s unemployment insurance programs. The amount and method varies by state. In general, companies are taxed a certain amount based on the number of employees on the payroll and the number of unemployment claims filed against the company. The higher the number of claims, the more an employer may have to contribute to unemployment insurance.

Can My Company Contest a Claim?

When an employee becomes unemployed, he or she may file a claim for unemployment benefits with the state’s unemployment office. The state will determine whether the employee is eligible for benefits based on state law. Following this determination, the employer will receive a notice that the employee is eligible. However, if you believe that the employee should not be eligible for benefits based on misconduct or other serious reasons surrounding the employee’s departure, you have the option of contesting the claim.

If you decide to contest a claim, be conscious of the time and money the process may consume. Additionally, contesting a claim may encourage a former employee to file for wrongful termination.

Do I Need a Lawyer to Contest an Unemployment Insurance Claim?

You are unlikely to need an attorney to contest claims for unemployment benefits, as your state unemployment office is able to provide information and guide you through the process. However, some employees, if denied benefits, may file a lawsuit for wrongful termination. If you are facing a lawsuit, you should consult an employment attorney to discuss your options.