November 3, 2008
EMPLOYER LIABILITY FOR UNEMPLOYMENT COMPENSATION OF SHORT-TERM EMPLOYEES
By: John Moran, Principal Analyst
You asked whether there is any employer liability for unemployment compensation for short-term employees who file for unemployment benefits.
An employer might be liable for some of the benefits paid to a former employee even if the employee worked for the employer only for a month or two. Generally, such an employee would have had to work for other employers during the same period on which the benefits are based in order to accumulate enough of a work history. In other words, working for one employer for just a month or two would probably not create enough of a work history for an employee to be eligible for benefits.
UNEMPLOYMENT ELIGIBILITY CRITERIA
To be eligible for unemployment benefits, a claimant must meet several criteria including:
● having received wages from one or more employers during his or her one year “base period,”
● having received wages during that period equal to at least 40 times the claimant's weekly benefit,
● having received at least $500 in wages during the base period,
● being available for and seeking employment, and
● having a separation from work that meets statutory requirements.
The claimant's benefit entitlement is determined by the wages paid by the employer (or employers) during a specified one-year work period. The period is defined as the first four of the five most recently completed calendar quarters before the claim is filed (CGS § 31-230). For example, if a claimant filed in the second quarter of a calendar year, wages paid in the first quarter of that year would not count towards the claimant's benefit. The base period would be the entire previous calendar year.
In 2003 an alternate base period was established for claimants who cannot establish wage eligibility based in the standard period. Under the alternate base option, the claimant can use the four calendar quarters immediately preceding the quarter when the claim is filed. This option helps people who are just entering or returning to the workforce.
Under either base period, a claimant must have been paid wages during the base period of at least 40 times his or her weekly benefit rate. A claimant who does not meet this requirement is not entitled to benefits. This means if the benefit calculation (described below) results in a $400 weekly benefit, the claimant would have to be paid at least $16,000 in the base period.
Multiple Employers in a Base Period
Under law, the initial determination establishing a claimant's weekly benefit rate must allocate the liability for the benefits to each employer who paid the claimant wages in his or her base period. An employer's
“maximum total liability for . . . a claimant's benefit year shall bear the same ratio to the maximum total benefits payable to the claimant as the total wages paid by the employer to the claimant within his base period bears to the total wages paid by all employers to the claimant within his base period. This ratio shall also be applied to each benefit payment (CGS § 31-255a(b)).”
For example, if an employer paid 20% of an eligible claimant's wages for the base period, then the employer is responsible for 20% of the claimant's unemployment benefits.
Each employer is mailed a copy of the initial determination that includes the allocation of benefit charges to the responsible employers. The employers (or the claimant) can appeal the determination (CGS § 31-225a (h) and § 31-241).
Minimum Wages That Trigger Employer Liability
No employer has any liability for an employee who received wages of $500 or less during his or her base period (CGS § 31-225a (c)).
Benefits are calculated by taking the average of the claimant's two highest earning quarters (using gross wages) of the four-quarter base period and dividing it by 26 (CGS § 31-231a (b)).
For example, if the individual's average for the two highest quarters is $8,000, the benefit would be $8000/26 = $307 a week. To be eligible, the claimant would also have to have earned at least $307 X 40 or $12,280 during the base period. Currently the maximum benefit is $519 a week.
For more information see the following link to the State Labor Department's An Employer's Guide to Unemployment Compensation: http://www.ctdol.state.ct.us/uitax/empl-guide.pdf.