Guy by stack of files iStock_000000261349SmallIn NY, NJ and CT, a company’s former employee may be entitled to unemployment benefits depending on the reasons they quit or were terminated. As a business owner or HR manager, it’s important to know the laws that govern how you handle claims and whether you have a basis for denying them.

Unemployment Law Basics

The unemployment insurance system was intended to serve two purposes:

  1. To provide a weekly check to workers who lose their jobs through no fault of their own.
  2. To reward those employers who minimize their workforce turnover, thereby promoting economic stability. Maintaining the flow of employee income through the economy has societal benefits in times of widespread unemployment

The monetary benefits paid to former employees come from federal and state unemployment taxes paid by companies. To promote goals of the unemployment system, the states of NY, NJ and CT have enacted regulations that base the unemployment tax rate of a company on the amount of benefits they’ve paid to former workers.

Your actions as a business affect your unemployment insurance tax rate. Unlike property, income and sales tax, a company actually has the power to influence its tax rates. You can lower your unemployment tax rate if you maintain company policies to:

    • Fire or lay off workers only when absolutely necessary to serve business objectives;
    • Go through proper procedures to terminate them; and,
    • Only contest unemployment benefit claims when you believe the former employee is ineligible.

On the other hand, if you implement policies contrary to the two purposes of the unemployment system, your taxes may increase.

Unemployment Benefits Eligibility in NY, NJ and CT

In order to be eligible for unemployment benefits, a former employee must have a minimum amount of time served on the job within a certain number of months before being terminated and filing for benefits. Each state has a different formula for determining the minimum needed to be eligible for benefits:

  • CT: Wages from the previous calendar year are used to determine eligibility. The highest and second highest quarters of earnings are the basis for the unemployment payment amount.
  • NJ: To be eligible for unemployment payments, the employee must have worked for at least 20 weeks or earned $8,300. The base period for calculation is the 52 weeks before the employee was terminated.
  • NY: This state also looks at wages from the previous calendar year to determine eligibility. An employee must have worked at least two of the four quarters to qualify for benefits and must have earned at least $1,600 during the highest paid quarter.

The failure of a former employee to meet these minimum eligibility requirements serves as grounds for a company to contest his or her claim for unemployment benefits.

Clearly, companies must stay current with the latest issues and regulations on eligibility in order to protect their interests and establish beneficial tax treatment. But the laws in CT, NJ and NY are complex and it’s difficult for HR managers and business owners to handle unemployment administration without some help. Paypro is a workforce management provider that offers robust solutions for unemployment cost and claims management. Our specialists can assist with claims processing, termination analysis and establishment of appropriate company procedures for dealing with unemployment issues.