DE 8714B Rev. 18 (11-06) (INTERNET) Page 1 of 2
The Unemployment Insurance Program, commonly
referred to as UI, provides weekly unemployment
insurance payments for workers who lose their job
through no fault of their own. Eligibility for benefi ts
requires that the claimant be able to work, be seeking
work, and be willing to accept a suitable job.
Unemployment Insurance is a unique federal-state
program, based on federal law but executed in its
relationship to the employer and the unemployed worker
through state law and by state employees. It is fi nanced
by unemployment program tax contributions from
When it was established more than 65 years ago as a
part of the Social Security Act of 1935, UI offered, for the
fi rst time, an economic line of defense against the effects
of unemployment, assisting not only the individual but
also the local community.
Through a system of payments made directly to
displaced workers, UI ensures that at least some of life's
necessities, most notably food, shelter, and clothing, can
be met while an active search for new work takes place.
For the most part, UI benefi ts are spent in the claimant's
local community, thereby helping sustain the economic
well-being of local businesses.
The UI program is fi nanced by employers who pay
unemployment taxes on up to $7,000 in wages paid to
each worker. The actual tax rate varies for each employer,
depending in part on the amount of UI benefi ts paid to
former employees. Thus, the UI tax works much like any
other insurance premium. An employer may earn a lower
tax rate when fewer claims are made on the employer's
account by former employees.
In all states, employers contribute to similar federal-state
UI programs, and the tax rate and other provisions vary
from state to state.
Part of the employer's tax goes directly to the federal
government to pay for the administration of the system.
The greater portion goes into a specia