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UNEMPLOYMENT INSURANCE LAW - ELIGIBILITY ISSUES

 

Monetary Eligibility Based on Wages
Continuing Eligibility Requirements
Total or Partial Unemployment - Waiting Week
Other Eligibility Issues

 

A. General Background

 

The unemployment compensation or unemployment insurance statutes enacted by all 50 states must meet federal guidelines; for that reason, unemployment insurance (UI) systems around the country are very similar. Generally, anyone who is no longer performing personal services for compensation may file a UI claim and try to draw benefits, but must meet various requirements, including monetary eligibility, continuing eligibility, and qualification requirements. These requirements for Texas claimants are found in the Texas Unemployment Compensation Act (TUCA - Texas Labor Code Sections 201.001 et seq.).

 

This paper focuses on the eligibility requirements that claimants must meet in order to draw unemployment benefits for which they are otherwise qualified based upon the reasons for their work separations.

 

B. Monetary Eligibility Based on Wages    Top of Page

 

To be monetarily eligible to file a UI claim, a claimant must have on record with the Texas Workforce Commission (TWC) a minimum level of earnings during the "base period" established by the claim; the base period is defined by each state, but is generally a year-long period of time lagging behind the time that the initial UI claim is filed.

 

In Texas, the base period is defined as the "first four of the last five completed calendar quarters" prior to the date the initial claim is filed. An easier way to think of it is to take the calendar quarter in which the initial claim is filed (the "quarter in progress"), as well as the quarter immediately preceding that (the "lag quarter"), and disregard those quarters. One goes back in time four calendar quarters from that time, i.e., the base period is the year-long period preceding the lag quarter, as shown below:

 

Base Period
Quarter 1
Base Period
Quarter 2
Base Period
Quarter 3
Base Period
Quarter 4
Lag Quarter Quarter In Progress When
Claim Is Filed
Included Included Included Included Not Included Not Included

 

A claimant who has been working for an employer that has been properly reporting its employees' wages will have "wage credits" on file with the Texas Workforce Commission. The wage credits are basically wages from employment, reported by the employer in its quarterly reports to TWC. The definitions found in the TUCA that pertain to wages are:

 

Sec. 201.081. General Definition of Wages.

 

In this subtitle, "wages" means all remuneration for personal services, including:

(1) the cash value of remuneration paid in a medium other than cash; and

(2) a gratuity received by an employee in the course of employment to the extent that the gratuity is considered wages in the computation of taxes under the Federal Unemployment Tax Act (26 U.S.C. Section 3301 et seq.).

 

Sec. 201.082. Exceptions to Wages.

 

In this subtitle, "wages" does not include:

(1) that part of the remuneration paid by an employer to an individual for employment during a calendar year that exceeds remuneration to the individual, excluding remuneration under another subdivision of this section, by the employer, of $9,000;

(2)  a payment, including an amount the employer pays for insurance or an annuity or pays into a fund for the payment of insurance or an annuity, that is made to or for an employee or the employee's dependent under a plan the employer established for employees generally, or a class of employees, including or excluding the employee's dependents, for:

(A) retirement;

(B) sickness or accident disability;

(C) medical or hospitalization expenses in connection with sickness or accident disability; or

(D) expenses related to death;

(3) a payment made to an individual employee for retirement, including an amount an employer pays for insurance or an annuity or pays into a fund for the payment of insurance or an annuity;

(4) a payment for sickness or accident disability, or medical or hospitalization expenses for sickness or accident disability, an employer makes to or for an individual employee after the expiration of six calendar months after the last calendar month the employee worked for the employer;

 

The minimum level of earnings for monetary eligibility to file a UI claim is found in Section 207.021(a)(5-6) of the TUCA. Those provisions boil down to this: a claimant must have wage credits in at least two calendar quarters in the base period, and the total base period wages must be at least 37 times the weekly benefit amount for the claimant. The weekly benefit amount is determined by taking the wage amount from the calendar quarter in the base period in which earnings were highest, and dividing that number by 25. In addition, if the claimant had a prior UI claim, he or she must have earned wages from employment equaling at least six times the weekly benefit amount following the prior initial claim.

 

A claimant who does not meet the minimum monetary eligibility requirements will have his or her UI claim disallowed. This sometimes happens if a person has not been working long enough to earn wages in at least two calendar quarters, in which case the claimant can then simply wait for another calendar quarter to file. In other cases, a claim is disallowed due to insufficient base period wages when the claimant really had been working enough time, but the wages were perhaps allocated to a wrong Social Security number or else the employer failed to report the wages at all. The latter problem usually occurs if the employer considered the claimant to have been an independent contractor; that problem is discussed in more detail in the article titled "Unemployment Insurance Law - Coverage Issues".

 

C. Continuing Eligibility Requirements    Top of Page

 

Claimants must meet several continuing eligibility requirements to draw benefits if they are otherwise qualified:

  1. must have filed a claim under TWC rules, properly registered for work at an employment office, and must report to the office whenever required;

  2. must be authorized to work in the United States;

  3. must be medically able to work;

  4. must be available for full-time work;

  5. must have been totally or partially unemployed for a waiting period of at least seven consecutive days; and

  6. must participate in reemployment services if the claimant has been determined to be likely to exhaust his or her regular benefits and to need those services to obtain new employment.

A claimant who at any point fails to meet one or more of those requirements will be held ineligible to receive benefits as long as the failure exists, even if otherwise qualified to receive benefits.

 

1. Work Registration and Reporting Requirements

 

The underlying rationale of the UI system is to pay benefits to those who are temporarily unemployed through no fault of their own. Part of being unemployed through no fault of one's own is trying one's best to become reemployed. For that reason, most claimants must register for work with the state's job matching system, a giant database of job openings and information on those who are looking for work. There are many different programs available to help claimants find new work, some of which require the claimant to report to a career development or Workforce Solutions center for classes, instructions, orientation, and so on. If a claimant is told to report for such an event or meeting, but fails to attend, she will be ineligible for benefits until she finally does come in. A determination to that effect is issued by TWC, and the claimant has the right to file an appeal and show good cause for not attending, such as having to attend a job interview with a prospective new employer, a definite date to return from a layoff or temporary shutdown, or using a union hiring hall to find work.

 

2. Authorized to Work in the United States

 

The point of the UI system is to get unemployed people back to work. They can work legally only if they are authorized to work in the United States, i.e., can satisfy the same I-9 requirements that apply to anyone seeking employment in this country. One of the things that claimants must do when registering for work (see requirement number 1 above) is to affirm, subject to verification by TWC, that they are authorized to work in this country. A claimant who cannot do that cannot draw UI benefits. Keep in mind that non-citizens may be authorized to work in the United States if they have proper work authorization documentation from the INS, so this is not a requirement that claimants be United States citizens.

 

3. Medical Ability to Work

 

The UI program is not meant to be a substitute for workers' compensation or Medicare / Medicaid programs. UI benefits are not for those who are so incapacitated by medical problems that they cannot work at all. One of the most important things for a claimant to show is medical ability to work.

 

Some employers think that just because a medical layoff was necessary for one of its workers, the ex-worker cannot file a UI claim due to medical inability to work. That is not how the medical ability to work requirement is designed. What it means in plain English is that the claimant must show that he is medically able to work in some field for which he is qualified by experience or training.

 

Many TWC precedent cases that illustrate this concept are found in the "Able and Available" section of the Appeals Policy and Precedent Manual, downloadable at http://www.texasworkforce.org/ui/appl/aa.pdf (PDF).

 

 

4. Availability for Full-Time Work

 

With only very narrow exceptions, claimants must be actively searching for full-time work in fields for which they are qualified by experience or training in order to be eligible for UI benefits. It is not enough to search for part-time work. Likewise, the work search must be reasonable under the claimant's circumstances, i.e., active enough to make it likely that the claimant will find a job within a reasonable amount of time. If a claimant fails to make a sufficient number of job contacts, there is a risk of being held unavailable for work and thus ineligible. A claimant may also be ineligible if he or she has unreasonable demands as to work schedules, job locations, pay, or benefits. In general, whatever the claimant has received in the past with similar jobs and similar employers, he or she should be willing to accept with a prospective new employer.

 

These principles are illustrated in the "Able and Available" section of TWC's Appeals Policy and Precedent Manual; employers may download that section at http://www.texasworkforce.org/ui/appl/aa.pdf (PDF).

 

 

5. Total or Partial Unemployment - "Waiting Week"    Top of Page

 

Two principles are at work here -- a claimant must be "unemployed" in order to be eligible for benefits, and cannot receive benefits for the first week of unemployment until he or she has received benefits for three weeks' worth of unemployment. "Unemployed" may be either totally unemployed or partially unemployed, according to the following definitions:

 

Sec. 201.091. Total and Partial Unemployment.

  1. An individual is totally unemployed in a benefit period during which the individual does not perform services for wages in excess of the greater of:

  1. $5; or

  2. 25 percent of the benefit amount.

  1. An individual is partially unemployed in a benefit period of less than full-time work if the individual's wages payable for that benefit period are less than the sum of:

  1. the benefit amount the individual would be entitled to receive if the individual was totally unemployed; and

  2. the greater of:

  1. $5; or

  2. 25 percent of the benefit amount.

  1. For purposes of this subtitle, an individual is considered unemployed if the individual is:

  1. totally unemployed as defined by Subsection (a); or

  2. partially unemployed as defined by Subsection (b).

  1. Notwithstanding Subsection (b), an individual is not partially unemployed for purposes of this subtitle for a benefit period in which the individual's working hours are reduced by the individual's employer as a result of misconduct connected with the work on the part of the individual. Such limitation will be effective for a maximum of four weeks from the effective date of such a reduction in hours.

  2. For purposes of this subtitle, an individual is not considered unemployed and is not eligible to receive benefits for any benefit period during which the individual works the individual's customary full-time hours, regardless of the amount of wages the individual earns during the benefit period.

The two most important definitions above are these: totally unemployed means someone who is earning 25% or less of the weekly benefit amount to which their base period earnings qualify them, and partially unemployed means someone who is earning more than 25%, but less than 125%, of their weekly benefit amount. In plain terms, a totally unemployed person is someone who is no longer working for pay, and a partially unemployed person is someone whose pay, due to a reduction in work time, is below 125% of the weekly benefit amount to which he or she would be entitled if totally unemployed.

 

A partially-unemployed claimant can file valid weekly claims and draw benefits as long as they report their work and earnings and do not earn 125% or more of their weekly benefit amount. The earnings act as an offset against the benefits. As an example, if an employee whose prior earnings entitle her to a weekly benefit amount of $240 per week experiences a drop in earnings due to a reduction in hours through no fault of her own (not as a disciplinary measure and not at the employee's own request), and the earnings fall below 125% of $240 per week, or $300, the employee can file a valid partial unemployment claim and draw the difference between the lower weekly earnings and $300 per week. A paycheck of $280 would thus result in payment of $20 in UI benefits. The reason that the law provides for partial UI benefits is to encourage employees whose hours are reduced to stay with the job and work the available hours, thus promoting employment, rather than quitting altogether and going on total unemployment; those who stay with the job and collect partial UI benefits end up with 125% of their weekly benefit amount, instead of only 100%. An estimate of partial benefit amounts may be obtained by using the fields below (enter numbers only - no dollar signs, commas, or decimals).

 

 
 
Click the button to estimate
the partial UI benefit:
 
Click the button to try a
different wage amount:

 

The requirement for the "waiting week" is found in the following section of the Texas Unemployment Compensation Act:

Sec. 207.021. Benefit Eligibility Conditions

  1. Except as provided by Chapter 215, an unemployed individual is eligible to receive benefits for a benefit period if the individual:

(1 - 6) ...

(7) has been totally or partially unemployed for a waiting period of at least seven consecutive days; and

(8) ...

  1. A week may not be counted as a waiting period week for the purposes of this section:

  1. unless the individual has registered for work at an employment office in accordance with Subsection (a)(1);

  2. unless it is after the filing of an initial claim;

  3. unless the individual reports at an office of the commission and certifies that the individual has met the waiting period requirements;

  4. if benefits have been paid or are payable with respect to the week;

  5. if the individual does not meet the eligibility requirements of Subsections (a)(3) and (a)(4); and

  6. if the individual has been disqualified for benefits for the seven-day period under Section 207.044, 207.045, 207.047, or 207.048.

  1. Notwithstanding any other provision of this section, an individual who has been paid benefits in the individual's current benefit year equal to or exceeding three times the individual's benefit amount is eligible to receive benefits on the individual's waiting period claim in accordance with this subtitle.

 

6. Participation in Reemployment Services

 

Claimants who are deemed to be difficult to reemploy may be required to participate in special programs designed to increase the chances of finding new work. The statute provides the following:

 

Sec. 207.021. Benefit Eligibility Conditions

(D) Except as provided by Chapter 215, an unemployed individual is eligible to receive benefits for a benefit period if the individual:

(1 - 7) ...

(8) participates in reemployment services, such as a job search assistance service, if the individual has been determined, according to a profiling system established by the commission, to be likely to exhaust eligibility for regular benefits and to need those services to obtain new employment, unless:

(A) the individual has completed participation in such a service; or

(B) there is reasonable cause, as determined by the commission, for the individual's failure to participate in those services.

 

D. Other Eligibility Issues    Top of Page

 

1. School or College Enrollment

 

In most cases, full-time attendance at a school, college, or university is incompatible with the requirement that a claimant be available for full-time work. The only ways around that requirement are for the claimant to show either that:

 

(a) the claimant is both looking for full-time work and willing to quit attending classes in order to accept suitable full-time work if offered; or

(b) the claimant's classes do not interfere with the normal hours of work for the kinds of jobs for which the claimant has experience or training, and that the claimant is actively searching for such positions.

 

Several precedent cases from TWC's Appeals Policy and Precedent Manual dealing with attendance at school, college, or university classes can be found in the "Able and Available" section of the Manual, downloadable at the following Web site: http://www.texasworkforce.org/ui/appl/aa.pdf (PDF).

 

 

2. Receipt of Pension or Other Funds

 

  1. Wages in lieu of notice or severance pay: Under Sections 207.049(1) and (2) of the Act, a claimant is disqualified from UI benefits for the period covered by wages in lieu of notice, a non-obligatory post-termination payment that is given to make up for the lack of advance notice of layoff or termination, or severance pay given under an employer policy. This disqualification does not apply to other types of post-termination payments, such as incentives to resign, retire, sign a release or waiver agreement, or settle a claim or lawsuit, or to severance pay owed under a negotiated contract or agreement.
  2.  

  3. Workers' compensation: According to Section 207.049(2) of the Act, a claimant cannot draw workers' compensation and unemployment compensation at the same time, except in the rare case of permanent, partial disability. However, if a claimant has such a disability, there could be an issue of whether the claimant is ineligible for benefits based upon medical inability to work, and the employer is entitled to raise the issue.
  4.  

  5. Pension or retirement benefits: Under Section 207.050 of the Act, if the claimant is receiving a pension or retirement payment based in part upon wages earned during the base period of the claim, there is a dollar-for-dollar decrease in the UI benefits that would otherwise be payable. This offset does not apply in the case of Social Security benefits.
  6.  

  7. Other wages: If a claimant is receiving income from part-time employment on the side while filing for unemployment benefits, it is possible for the claimant to draw what is known as "partial unemployment benefits" under Section 207.003 of the Act. In order to do so, the claimant must be "partially unemployed" through no fault of his or her own and be earning below a certain "cut-off" amount. The cut-off amount is equal to 125% of the weekly benefit amount to which the claimant would be entitled in the case of total unemployment. The partial unemployment benefit amount is calculated by multiplying the normal weekly benefit by 1.25 and then subtracting from that amount the weekly earnings from the claimant's employment on the side. That difference is what the claimant will receive in partial unemployment benefits. This goes hand-in-hand with the requirement that claimants report all work and earnings while filing claims for benefits. Failure to do so can render a claimant subject to a fraud ruling.

 

3. Refusal of Suitable Work

 

Section 207.047 of the Act disqualifies a claimant who, while in claim status, has refused a referral to, or an offer of, suitable work without good cause. A referral to suitable work can include the situation that occurs when TWC directs a claimant to return to his or her customary self-employment, if they have had their own business in the past. This proceeds directly from the work search and availability requirements that claimants must satisfy in order to be eligible for continued weekly UI benefits. In a nutshell, in all but the most unusual of cases, a claimant must be available and actively searching for full-time work while collecting UI benefits. Claimants are told that if they receive an offer of suitable work, they must accept it, unless there is some good reason not to do so, or else face disqualification. Such a disqualification is every bit as serious as a disqualification for quitting a job without good cause connected with the work or for being discharged for misconduct connected with the work.

 

Before TWC will assess a disqualification, the following criteria must be satisfied (as taken from TWC's Unemployment Insurance Manual):

  1. A definite work offer or referral must have been made directly to the claimant, with an explanation covering the nature of the work, the wages, hours of work, job location, and other requirements. See Appeals Policy and Precedent Manual, SW 170.10.

  2. The work must be suitable per the requirements of Section 207.047 and 207.008 of the Act.

  3. The claimant must have refused the offer or referral or failed to report to the employer when so directed.

This provision makes it important for a prior employer to stay aware of its former employee's job-hunting activities after a UI claim is filed, if possible, and to promptly report any perceived refusal of suitable work on the claimant's part. There is nothing wrong with companies sharing information with each other concerning such activities.

 

The Appeals Policy and Precedent Manual of TWC has many precedent cases in this area of the law; employers can download a copy of that section of the Manual at http://www.texasworkforce.org/ui/appl/sw.pdf (PDF). For more detailed information regarding suitable work issues, see "V. Focus: Refusal of Suitable Work" in the article "Unemployment Insurance Law - Qualification Issues" in this part of the book.

 

 

E. Conclusion

 

Aside from the well-known qualification issues relating to whether it was the claimant's fault that he or she became separated from the last work, there are many eligibility issues upon which the claimant's ability to draw UI benefits depends. It is definitely worth the employer's while to be aware of these various eligibility issues and to notify the Commission whenever the employer has knowledge that certain requirements are not being met by the claimant. After all, the bottom line is that UI benefits are supposed to be for those who are able to work and are out of work through no fault of their own, and if any of the foregoing requirements is not satisfied, the claimant cannot be considered entitled to such benefits.

 

 

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