Partial Unemployment Benefits for Hour and Pay Cuts

Let’s Talk Business Kingmaker Society Community Chat Partial Unemployment Benefits for Hour and Pay Cuts

  • Post
    Most people probably aren’t even aware that a thing such as partial unemployment benefits even exists. Did you know that you can receive benefits even if you’re still working? In fact, unemployment insurance (UI) benefits aren’t so black and white – lose your job, get assistance. There are benefits available for employees who received hour cuts or pay decreases. As a business owner, you should know this.

    Eligibility for Partial Benefits

    Eligibility for partial unemployment differs by state; however, there are general requirements:

    • Employees must become unemployed through no fault of their own – in other words, their employer must have cut their hours, not at the employee’s request. Additionally, eligibility is nullified if an employee goes back to school and receives hour reductions.
    • The employee must be willing to work full time and looking for work. Note: With COVID-19 changes in place, some employees may not have to search for work while obtaining unemployment benefits. The California Unemployment Insurance office, for instance, states ” You are not required to look for work each week to be eligible for benefits.”
    • Employees could be eligible if after losing their job they were only able to find part time work.

    Determining Eligibility

    Besides the general requirements above, there is only one way to know if employees meet eligibility requirements: an employee must apply for unemployment with their state’s unemployment office. Once UI office receives the employee’s application and reviews their employment information, they will determine their eligibility and length of their benefits. If eligible, employees will receive notifications with their next steps. Employers will also receive a notification regarding their employee’s unemployment status.

    During the COVID-19 pandemic, some states placed FAQ sections on their websites for employees who have questions about eligibility. Here’s a handy website to find your state’s unemployment benefit websites and resources.

    Where the Unemployment Funds Come From

    The Department of Labor’s unemployment insurance program is funded through the unemployment tax that employers pay as a part of their payroll taxes. It’s an insurance or tax that an employer pays, regardless of whether the employer ever employs people that use the benefit. Like most insurance premiums, we may never use the benefits. We do, however, have to pay them anyway to support the collective need. For more details, read this article on

    How Unemployment Claims Impact Employers

    When employees claim these benefits, employers could start paying higher employment taxes due to an increase in their unemployment insurance tax (the FUTA tax). It’s similar to car insurance rates which rise when you make a claim. The employer’s tax rate is higher when they lay off more employees who claim unemployment. Partial unemployment claims also affect the unemployment insurance tax rates.

    Avoid Cutting Hours and Pay

    To avoid increases in employment tax rates, great care should be taken to hire good people and to avoid layoffs, pay cuts, and reducing hours.

    Of course, you can’t always avoid these things. Companies go through periods of hardship where pay cuts and layoffs are inevitable. Sometimes employers reduce a troublesome employee’s hours in hopes that the employee will resign. It’s a reasonable strategy for avoiding legal difficulties, but it could mean that the employee starts collecting unemployment benefits. That’s one of many reasons why good hiring strategies and retention efforts are important for employers. It helps keep costs down in the long run.

    There are all sorts of reasons that employees don’t work out or don’t work out in the way initially hired. Many of them are inevitable. But by offering a good company culture, decent working conditions, amicable management, living wages, and even severance packages, many issues can be avoided.

    Being aware of where the unemployment money comes from and when employees can collect it can help employers make better business decisions and avoid most unemployment claims.


  • You must be logged in to reply to this topic.