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State Employment Laws

What You Need to Know About State Employment Laws

Your company needs to know the specific employment laws that apply in the state or states where it employs people. Failing to recognize and abide by particular state employment laws can expose your company to costly litigation. Keep the following in mind when considering the differences among these and other state employment laws.

State Unemployment Compensation Laws Differ

Unemployment compensation is regulated by the Federal Unemployment Tax Act (FUTA) and jointly administered by federal and state authorities. Under FUTA, the individual states are free to set their own limits on weekly benefit amounts, unemployment tax rates, taxable wage bases, and unemployment eligibility and disqualification requirements.

Unemployment benefits are financed by a tax on a certain portion of wages paid to employees; this “taxable wage base” varies from state to state.

Employment at Will Varies from State to State

Some states are “employment at will” states, which means that employers may generally terminate an employment relationship at any time and for any reason. Keep in mind that particular state law may place limitations on an otherwise employment-at-will relationship.

States Define “Employment”

The legal definition of “employment” is fairly broad. It includes most part-time and temporary employees. Independent contractors may be excluded, but only if the employer has little control over their work. Federal requirements leave some room for states to establish different criteria for defining employment and for determining the kinds of services that are excluded.

State Employment Law Dictates Unemployment Benefits

The amount an individual receives for a compensable week of unemployment, known as the weekly benefit amount, varies according to state law. Usually the amount is equal to 50 percent or 60 percent of the claimant's normal weekly earnings up to a maximum prescribed by state law.

Benefits typically continue for 26 weeks. There is an initial waiting period in most states before benefits begin, typically one week. Check with your state to see how it applies the rules.




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