When workers become unemployed, they can apply to receive benefits from a state unemployment compensation fund until they find other work. Every employer must pay unemployment insurance on each employee in its organization, and these payments are then placed into the state fund. 

Former employees can receive unemployment compensation only if they are out of work through no fault of their own. Voluntary separation or termination for misconduct may make it difficult for the worker to make a claim for benefits, and employers are entitled to challenge claims for unemployment when they believe the claims are invalid.

Unemployment Insurance: Employee Quits 

If an employee quits, he or she will only be eligible for unemployment insurance compensation if the resignation came about for a valid reason that was somehow caused by the employer. To be eligible, it must be shown that the worker would have suffered some sort of harm or injury if he or she stayed on the job. The standard is whether a reasonable person in the job situation would have remained on the job.

In order to constitute good cause for quitting, the employee's reason must be compelling. Deciding to quit a job because it doesn't offer opportunities for advancement may be a good reason, but it will not be considered compelling by most courts.  Dissatisfaction with the job is also not considered a compelling reason to quit.

For purposes of collecting unemployment insurance compensation, compelling reasons to leave a job may include:

• Harassment.
• Discrimination.
• Substantial reduction in hours or pay.
• Threats of termination or choice of resignation.
• Unsafe or hazardous working conditions.

Unemployment Insurance: Employee is Laid Off 

If an employee is laid off by an employer, or working hours are significantly decreased, the worker will receive unemployment benefits as long as he or she has enough employment tenure to be eligible under the state's program.

Unemployment Insurance: Employee is Fired 

Employees who were fired can claim unemployment compensation benefits if they were terminated for reasons other than their own misconduct. For example, if an employee was terminated because the company was experiencing financial difficulty and had to reduce the size of the workforce, then that employee is entitled to unemployment compensation. A fired employee may also be eligible for unemployment benefits if the employer had good cause to terminate him or her, but the infractions were minor or the misconduct was unintentional. In other words, not all actions that result in termination are serious enough to qualify as misconduct so as to result in a denial of unemployment compensation benefits.

Stages of an Unemployment Compensation Claim 

While there are variations from state to state, a typical unemployment compensation claim proceeds as follows: 

1. The claim is filed.
2. The state agency makes an initial determination as to whether the former employee is eligible to receive unemployment benefits.
3. If there is a dispute, the employee and employer will submit relevant forms and documents. 
4. If the matter still is unresolved, a referee conducts a hearing where both the employer and the former employee may call witnesses to support their positions.
5. If either party disagrees with the referee's decision, they can appeal it to an administrative agency.
6. If the employer or former employee disagrees with a board of review's decision, they can appeal it to the state court system.  

Legal Help with Unemployment Insurance Issues 

Employees who have been laid off, wrongfully discharged, or forced to leave employment for a compelling reason are entitled to receive unemployment compensation benefits. If you have questions about your rights under your state's unemployment compensation system, contact an experienced employee rights attorney near you.