Ch8. Benefits Law Deep Dive — Unemployment, Workers' Comp, and Health Insurance

Unemployment Insurance (UI)

Coverage:
Virtually all wage and salary workers (state programs, federally guided)
Self-employed generally not covered (unless opted in under some state programs)

Premium / Tax:
FUTA: employer pays 6% on first $7,000 of wages (credit reduces to 0.6% if state taxes paid)
State UI tax (SUTA): employer only; rate experience-rated

UI Eligibility Requirements:
Earned sufficient wages in the base period (typically last 4–5 quarters)
Separated through no fault of the employee (layoff, involuntary)
Actively seeking work

Benefit Duration:
Standard: up to 26 weeks (most states)
Extended benefits: up to 13 additional weeks during high unemployment periods

Parental / Family Leave Benefit:
Many states now offer paid family leave (PFL) through state insurance funds
Federal: FMLA unpaid only; no federal PFL program yet

---

Workers’ Compensation

Key Features:
Employer pays 100% of premium
No-fault system: benefit triggered by work-related injury or illness

Covered Injuries:
Occupational accident: injury during and arising out of employment
Occupational disease: illness caused by workplace conditions
Commute injury: generally not covered (AOE/COE requirement)
(some states cover direct commute under specific conditions)

Benefit Types:
Medical benefits: 100% of authorized treatment costs
Temporary Total Disability (TTD): typically 2/3 of average weekly wage
Permanent Partial Disability (PPD): schedule or impairment rating
Death benefits: burial costs + weekly benefits to dependents

Statutes of Limitation:
Workers' comp claim: 1–2 years from injury or date of discovery (varies by state)

---

Health Insurance and Retirement Plans

Employer-Sponsored Health Insurance (ACA):
Employers with 50+ FTEs must offer minimum essential coverage or pay penalty
Employee contribution: typically 50% or more employer-paid premium

ERISA Plans:
Federal law governs employer-sponsored retirement and welfare plans
Fiduciary duty: plan fiduciaries must act solely in participants' interest

Retirement Plan Comparison:
Health: employer + employee share premium (typically 50/50 or better for employee)
401(k): pre-tax employee contributions + optional employer match
Workers' comp: employer pays 100%

UI Tax Comparison:
FUTA: employer only (federally administered)
Social Security: employer 6.2% + employee 6.2%
Medicare: employer 1.45% + employee 1.45%
Workers' comp: employer 100%

---

Key Concept Cards

UI Eligibility = Base-Period Wages + Involuntary Separation ★★★★★ : Claimant must have sufficient base-period wages AND be separated through no fault of their own. Memory hook: UI = wages + involuntary

Workers’ Comp = Employer Pays 100% ★★★★★ : Workers’ comp is the only major employment insurance program fully paid by the employer. Memory hook: workers’ comp = employer 100%

TTD Benefit = ~2/3 of Average Weekly Wage ★★★★☆ : Temporary total disability replaces approximately two-thirds of the worker’s pre-injury earnings. Memory hook: TTD = 2/3 AWW

---

Practice Quiz

Q. Can a worker who voluntarily quit collect UI benefits, and what are the exceptions?

General rule: voluntary quit disqualifies a claimant from UI. Exceptions recognized by most states: employer-caused constructive discharge (forced resignation due to intolerable working conditions, wage theft, or harassment); quit due to a documented medical condition; quit to follow a relocating spouse; quit to care for an immediate family member. The claimant bears the burden of proving a compelling reason. Employers often contest voluntary-quit claims to protect their experience rating. Advising clients on how to document the reason for separation is a core advisory task.

Q. Is a worker’s injury during the daily commute covered by workers’ compensation?

General rule: commute injuries are NOT covered — workers’ comp requires the injury to arise out of and in the course of employment (AOE/COE). Exceptions: the employer provides transportation; the employee has no fixed workplace (traveling employees); the injury occurs on employer premises; the employee was performing a work errand during the commute. Unlike the Korean system (which added commute coverage in 2018), US state workers’ comp laws vary significantly on this point — candidates should know the general rule and key exceptions.