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Unemployment Insurance 101

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What’s Unemployment Insurance?

The Unemployment Insurance (UI) system is a state-federal partnership to provide cash assistance to people who may lose their job or can’t find work for reasons out of their control.

By state-federal partnership, we mean that the federal government supports and sets parameters for state governments to provide benefits to protect eligible workers. In times of economic insecurity, like the ones we are facing today, the federal government typically steps in to provide more support to states, including allowing states to borrow money from the federal government to stay afloat. This enables states to provide greater access to benefits, for larger amounts and longer durations. Each state sets its own eligibility and benefit rules within federal guidelines.

How does the UI system work?

Ordinarily, workers and employers contribute a portion of wages through payroll taxes to a statewide fund. That way, if an eligible employee loses their job involuntarily, the UI program will provide them about half of their wages, up to a maximum of $823 per week for up to 26 weeks. In order to qualify for the full 26 weeks of you are “able, available, and actively searching for new work.”

What about self-employed workers?

People who are self-employed, and others classified as independent contractors such as Uber drivers, are not covered by UI. This leaves a lot of people vulnerable if they’re unable to continue getting income from work. When the U.S. President makes an expected major disaster declaration, then self-employed workers will be able to receive a separate form of Disaster Unemployment Assistance through the state.

So…what’s happening on the federal level?

Congress has taken important first steps to make UI more robust. The Families First Coronavirus Response Act increased state flexibility to extend UI benefits to eligible people whose work is disrupted by the COVID-19 crisis; though UI explicitly is not to be used as paid sick leave and individuals receiving sick leave are not eligible.

Congress has also created a trigger so that when the unemployment rate increases, the maximum duration of benefits will be extended for an additional 13 weeks. State UI funds can normally borrow from the federal government when claim payments outpace contributions, but no interest will be charged for these loans in 2020. Congress is currently finalizing a COVID relief bill that would temporarily provide an additional sum both to those receiving state unemployment assistance and as well as to eligible self-employed workers unable to receive state UI.

And on the state level?

The Commonwealth has taken some important steps to respond to federal flexibility and new incentives including:

  • Waiving the one-week waiting period so that people without work due to the crisis can apply immediately for unemployment benefits (the federal government is paying for this);
  • Changing eligibility rules to clarify that workers seeking benefits will not be disqualified as unavailable or not seeking work if they are quarantined, due to an order by civil authority or medical professional, or are unemployed because of “reasonable risk of exposure or infection or to care for a family member.” A worker doesn’t need to provide medical documentation to receive UI under these circumstances;
  • Suspending requirements for unemployed workers to attend training seminars; and,
  • Making workers eligible for benefits during temporary shutdowns with expected reopening.

Are immigrants eligible for UI?

Unfortunately, immigrants who have been living and working in Massachusetts but are without status cannot receive UI. Green card holders and others who are authorized to work by the federal government are generally eligible for UI under federal law.

What else should Mass. do?

The good thing about federal-state partnerships is that Massachusetts doesn’t have to do it alone. While the federal government can use its resources to expand the UI program to help address this crisis, the Commonwealth can use its more limited resources to fill in gaps that aren’t covered federally, like:

  • Increase state administrative staffing levels to process more unemployment claims (the federal government will provide Massachusetts up to $25.8 million for this.)
  • The state could encourage and publicize a rarely used Massachusetts law which creates a policy to prevent lay-offs. The policy enables the shared reduction of paid work time within a company — enabling companies to retain workers in place for a future recovery and workers to remain connected to their jobs with health and retirement benefits. Workers get to collect (reduced) unemployment for the partial work reduction.
  • Set up relief for those with a work record who are not eligible for UI or federal direct payments. It would not explicitly be for immigrants, but would benefit them. The federal government is unlikely to contribute to such a program.

 

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