What is SUI (State Unemployment Insurance)?

Discover state unemployment insurance, how it works, what benefits it provides, and how state unemployment insurance programs can help people while looking for a new workplace.

According to recent unemployment statistics, about 1.2 million U.S. workers were laid off or discharged in April this year. And the employees who lose their jobs for reasons that are out of their control could qualify for the state unemployment insurance program.

The state unemployment insurance was created in 1953 to support the basic needs of unemployed workers until they find a new job. That’s why the benefits they receive are temporary.

Typically, the period over which one can receive compensation is around 26 weeks, which is about half of the previous wage base, on average.

Before the pandemic, the trust fund for this program had $72.5 billion.

However, the COVID-19 restrictions changed the working conditions, and many people were fired and unable to work. Hence, the trust funds were drained, and in 2021 40 states and territories remained below the recommended solvency level.

But the situation is improving in 2022, with 31 states meeting the minimum solvency level, and the balance is now at almost $40 billion and constantly increasing.

What is State Unemployment Insurance?

Simply put, state unemployment insurance, often referred to as SUI, is a state program funded by taxes paid by employers that support workers who get discharged because of layoffs or other uncontrollable reasons.

Thus legally, people who quit their jobs voluntarily or get fired are not eligible to apply for these benefits. SUI covers only those who are not responsible for becoming unemployed.

The basic unemployment insurance program is in the hands of the states; however, the US Department of Labor supervises their work to ensure compliance.

How does State Unemployment Insurance Work?

Unemployment insurance is a joint program between individual state and federal governments.

As such, each state has the freedom to design a program, including the eligibility requirements and the level of benefits, but it must follow guidelines specified by federal law.

To receive the benefits, workers must meet specific criteria and pass the application process. The basic program gives cash stipends for up to 26 weeks, about half of the worker’s average pay.

However, suppose the state’s unemployment situation is dramatically worsening.

In that case, depending on the unemployment rate and insurance laws, some workers might be eligible to apply for the extended benefits program, which provides additional compensation for 13 to 20 weeks.

Who Pays For SUI?

SUI is funded by specific federal and state employer payroll taxes. It means employers are obliged to pay these taxes, not employees, except in Alaska, New Jersey, and Pennsylvania.

In every state, employers must pay state and federal unemployment taxes if in any quarter of the year they pay employee wages totaling $1,500 or if they had at least one employee for any day of the week during 20 weeks in a year regardless of whether the weeks were consecutive.

Since some state rules, laws, and procedures differ from the federal ones, employers should contact the state workforce agencies to find the proper requirements for paying taxes.

Who Qualifies for Unemployment Benefits?

To qualify for unemployment benefits, a person has to meet specific criteria.

Each state has its guidelines, but generally, applicants must comply with two primary conditions:

Be unemployed through no fault of their own.
Meet work and salary requirements, meaning earning a certain amount while working for a specific time.

Applicants can learn about the other necessary requisites through the state workforce agencies.

How to apply for Unemployment Insurance?

To apply for unemployment insurance, applicants must determine whether they meet the eligibility criteria. After establishing that, they need to file a claim with the SUI program in the state where they worked.

There are three options to file a claim: in person, via phone, or online.

The proper channel to do this depends on the state, as some states might require filing online or in person.

Filing a Claim

The person must contact the State Unemployment Insurance agency after losing their job to find out how they can file a claim.
When filing a claim, the applicant must provide certain information, such as addresses and dates of former employment. To avoid any delay, the information provided must be complete and correct.
Generally, the candidate files the claim in the states where they worked. But if they worked in a state different from the one they live in, or if they worked across multiple states, the agency in the home state can provide information on how to file a claim in different states.
The first benefits check comes about two to three weeks after filing a claim. Some states have a one-week waiting period. Thus, the second week after filing becomes the first week of payment.

Continued Eligibility

Regarding continued eligibility, candidates must file claims weekly or biweekly and answer questions. In addition, they need to report any job offers or refusals of work, as well as any earnings during the week(s).
If required, they must report to the local Unemployment Insurance Claims Office or One-Stop/Employment Service Office on the scheduled day and time. Failure to report results in dismissal of the benefits.

Registering For Work

Applicants might have to register for work with the State Employment Service to get assistance in finding a job. Even if it is not obligatory to register, they can still get help finding employment from the Employment Service.
The Employment Service office refers candidates to job openings in the area or other parts of the state. They provide current job market information and many free re-employment services. They can refer to training programs or offer testing and counseling for different jobs.

Disqualification from Eligibility

If the reason for becoming unemployed is “lack of work,” eligibility is guaranteed. In other cases, it has to be determined whether the candidate is eligible for benefits.
The state makes determinations for eligibility under its law or federal laws.
If denied, an applicant can file an appeal within a specific time frame. An employer can also appeal a determination per the state’s advice on appeal rights.

What Benefits Does Unemployment Insurance Provide?

Whether they live in the same state or not, workers receive benefits from the state where they worked. The two variables of the benefits are the number of weeks they last and the weekly amount.

While some states provide benefits for the same length of time to every unemployed person, most states decide on the number of weeks depending on the worker’s amount of earning previously, whether they earned money in each quarter that makes up the base period, and how the amounts were distributed during the base period.

Most states provide benefits for a maximum of 26 weeks, but some workers are eligible for less than that because of uneven earnings or short working time. According to state laws, typically, the benefits cover about half of the claimant’s previous salary.

How Often Is State Unemployment Insurance Paid?

Depending on the state and its rules and regulations, state unemployment insurance is paid weekly or bi-weekly.

Regarding the amount received, in 2019, the average benefits per week were $378. However, each state has its different limits and averages. For instance, in the same year, the maximum average weekly amount was recorded in Massachusetts at $555, whereas Mississippi paid the least at $213.

Federal & State Requirements

Every state has the freedom to design its unemployment insurance program.

Thus, the eligibility requirements and the benefits level differ from state to state. However, the funding of the programs comes from state and federal taxes.

Regarding state taxes, every employer has to pay a payroll tax, also known as SUI tax, which is one way to fund the programs.

Employers’ SUI tax rate is typically between 0.5% and 3.5%.

However, depending on how long the employer works, it can go up to 11% in some states. What is important to point out is that the tax rate and the wage base are variable and can change annually.

Current information about tax rates and taxable wage base is available at the US Department of Labor.

In addition to SUI taxes, employers must also pay the Federal Unemployment Tax Act, also called FUTA. Employers pay this tax by filing an annual IRS Form 940. This tax covers the costs of administration of the benefits in the states. Additionally, it covers half of the extended unemployment benefits costs and provides funds from which states can borrow to pay benefits if needed.

To calculate the FUTA taxes, the employer should multiply 6.0% times the taxable wages. A taxable salary is the first $7,000 in wages paid to each employee yearly. If an employer regularly pays its state unemployment taxes, they can get an offset credit of up to 5.4%. The FUTA rate for states not subject to a FUTA credit reduction is generally 0.6% or a maximum of $42 per employee.

State Unemployment Insurance by State

To gain greater insight into the difference in the length of benefits, the average weekly amount, and the highest and lowest possible weekly amounts, check out the table below. The data is shown by arranging the states alphabetically for easier browsing.

State	Maximum Benefits Length (weeks)	Average Weekly Benefit	Highest Possible Weekly Benefit	Lowest Possible Weekly Benefit
Alabama	26	$255	$275	$45
Alaska	26	$287	$370	$56
Arizona	20	$236	$240	$187
Arkansas	16	$244	$451	$81
California	26	$303	$450	$50
Colorado	26	$399	$649	N/A
Connecticut	26	$338	$667	$75
Delaware	26	$260	$400	$20
Florida	12	$236	$275	N/A
Georgia	20	$273	$365	$55
Hawaii	26	$472	$648	$5
Idaho	20	$320	$414	N/A
Illinois	26	$353	$505	N/A
Indiana	26	$255	$390	$50
Iowa	26	$373	$493	$73
Kansas	26	$375	$488	$122
Kentucky	26	$322	$560	$39
Louisiana	26	$192	$247	$101
Maine	26	$322	$462	N/A
Maryland	26	$359	$430	$50
Massachusetts	30	$473	$855	N/A
Michigan	20	$322	$362	$209
Minnesota	26	$410	$762	N/A
Mississippi	26	$196	$235	$30
Missouri	20	$251	$320	N/A
Montana	28	$382	$552	$163
Nebraska	26	$321	$440	N/A
Nevada	26	$366	$469	N/A
New Hampshire	26	$281	$427	$32
New Jersey	26	$426	$713	N/A
New Mexico	26	$324	$484	$90
New York	26	$353	$504	$172
North Carolina	20	$236	$350	$50
North Dakota	26	$459	$618	N/A
Ohio	26	$348	$480	$140
Oklahoma	26	$354	$520	N/A
Oregon	26	$387	$648	$151
Pennsylvania	26	$361	$572	$8
Rhode Island	26	$344	$599	$59
South Carolina	20	$238	$326	$42
South Dakota	26	$319	$428	$28
Tennessee	26	$227	$275	N/A
Texas	26	$386	$535	$70
Utah	26	$391	$560	N/A
Vermont	26	$358	$513	N/A
Virginia	26	$352	$378	$60
Washington	26	$447	$844	$201
West Virginia	26	$271	$424	$24
Wisconsin	26	$301	$370	$54
Wyoming	26	$413	$508	$36

Data shows that the three states that pay the highest benefits amounts are Massachusetts ($855), Ohio ($673), and Washington ($844). On the other hand, the three states with the lowest compensations are Mississippi ($235), Arizona ($240), and Louisiana ($247).

Regarding the length of receiving benefits, Massachusetts (30 weeks) and Montana (28 weeks) provide them the longest, whereas Florida (12 weeks) and Arkansas (16 weeks) pay compensation for the shortest duration.

On a Final Note 

If a person loses their job, the state can help them financially through the state unemployment insurance programs while they look for a new workplace.

Written by Shortlister Editorial Team

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What is SUI (State Unemployment Insurance)?

In This Post:

What is State Unemployment Insurance?

How does State Unemployment Insurance Work?

Who Pays For SUI?

Who Qualifies for Unemployment Benefits?