Who regulates employment insurance?


Quick Answer

The U.S. Department of Labor under the Secretary of Labor regulates employment insurance, or unemployment compensation, in conjunction with state labor departments. The federal government regulates minimum standards, and the states hold responsibility for administering the program by setting eligibility requirements, the compensation amount and the maximum duration of compensation.

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Full Answer

Federal regulations demand that compensation does not require employees to undergo a means test, as eligibility is not due to a maximum income standard. Eligibility occurs through the reason for unemployment and the amount put into the fund over a specific period of time. States determine the maximum weekly amount along with additional compensation for dependents. Federal provisions allow for benefits over a longer period during times of national economic upheaval.

The unemployment compensation program provides employees with monetary payments, if they lose their jobs involuntarily. Wage payments include tax withholding for federal and state employment insurance. Federal tax withholding for the program has maximum taxable limits on base pay. It is up to each state to define the tax rate, which states usually determine by how many past employees use the program, as well as the amount employers place into the fund and the maximum taxable base dependent upon the needs of the state. Tax money goes into a trust fund for the specific purpose of unemployment compensation.

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