Ch9. Social Insurance — Unemployment, Workers' Comp, and Social Security

┌──────────────────┬─────────────────┬──────────────────┬──────────────────┐
│ Program          │ Administered by │ Key Benefits     │ Funding          │
├──────────────────┼─────────────────┼──────────────────┼──────────────────┤
│ Social Security  │ SSA (federal)   │ Retirement,      │ Employee 6.2%    │
│                  │                 │ disability,      │ + Employer 6.2%  │
│                  │                 │ survivors        │ (up to wage base)│
├──────────────────┼─────────────────┼──────────────────┼──────────────────┤
│ Medicare         │ CMS (federal)   │ Health coverage  │ Employee 1.45%   │
│                  │                 │ at age 65+       │ + Employer 1.45% │
├──────────────────┼─────────────────┼──────────────────┼──────────────────┤
│ Unemployment     │ State agencies  │ Temporary wage   │ Employer FUTA    │
│ Insurance        │ (fed. standards)│ replacement      │ + state SUI tax  │
├──────────────────┼─────────────────┼──────────────────┼──────────────────┤
│ Workers'         │ State agencies  │ Medical + wage   │ Employer only    │
│ Compensation     │ (state law)     │ replacement for  │ (private insurer │
│                  │                 │ work injuries    │ or state fund)   │
└──────────────────┴─────────────────┴──────────────────┴──────────────────┘

Unemployment Insurance

Eligibility

Federal-state partnership (FUTA + state UI laws):
Each state sets its own rules within federal guidelines.

General eligibility requirements:
① Involuntary separation (laid off, furloughed, contract ended)
② Sufficient base-period wages (typically last 4–5 completed quarters)
③ Able and available to work
④ Actively seeking suitable employment

Voluntary quit:
Generally ineligible.
Exceptions (varies by state): constructive discharge, domestic violence,
  compelling personal circumstances, employer misconduct.

Misconduct:
Employee discharged for misconduct is typically disqualified.
Severity matters: simple errors ≠ misconduct; intentional rule violations do.

Benefit Amount and Duration

Benefit amount:
Typically 40–60% of prior weekly wages
Subject to state weekly maximum (varies: approx. $235–$1,100/week)

Duration:
Standard: up to 26 weeks in most states
(Some states have reduced to 12–20 weeks)
Extended benefits: triggered automatically during high unemployment periods
Federal emergency programs (e.g., CARES Act FPUC): ad hoc, temporary

Waiting week:
Many states require a 1-week waiting period before benefits begin.

Workers’ Compensation

Coverage and Eligibility

Workers' compensation:
State-level, no-fault insurance for workplace injuries and illnesses.

Coverage:
① Occupational accident: injury arising out of and in the course of employment
② Occupational disease: illness causally related to employment
③ Commuting: generally NOT covered (unlike Korea's 2017 expansion)
   Exception: travel that is part of the job (sales calls, errands)

Employer responsibility:
Employer funds coverage entirely (no employee contribution).
No proof of employer negligence required.
Employee fault does not bar recovery (gross negligence/intoxication may reduce).

Workers' comp benefits:
- Medical treatment: 100% of reasonable and necessary medical costs
- Temporary total disability (TTD): ~66% of pre-injury average weekly wage
- Permanent partial disability (PPD): scheduled benefits for specific injuries
- Permanent total disability (PTD): ongoing wage replacement
- Death benefits: paid to surviving dependents

Special Characteristics

Exclusive remedy doctrine:
In most states, workers' comp is the EXCLUSIVE remedy against the employer.
Employee cannot sue the employer in tort for work injuries
(except for intentional torts or OSHA willful violations in some states).

Third-party claims:
Worker may sue a negligent third party (e.g., equipment manufacturer).
Employer/insurer has subrogation rights to recover from third-party judgment.

OSHA relationship:
OSHA enforces workplace safety standards (civil penalties, inspections).
OSHA violations do not automatically create workers' comp liability —
  they are separate regulatory systems.

OSHA — Workplace Safety

Occupational Safety and Health Act (1970):
Administered by OSHA (DOL).

General Duty Clause:
Employers must furnish a place of employment free from recognized
hazards that are causing or likely to cause death or serious injury.

OSHA enforcement:
Inspections: programmed (high-hazard industries), complaint-based, referral
Penalties (2024): up to $16,131 per serious violation;
  up to $161,323 per willful or repeat violation

Employee rights under OSHA:
- Request an OSHA inspection
- Refuse imminently dangerous work (must meet legal standard)
- Anti-retaliation protection: file complaint within 30 days

Recordkeeping:
Employers with 10+ employees must record work-related injuries and illnesses
on OSHA 300 log.

Workers’ Comp = Employer-Only Funding ★★★★★ : Employees pay nothing. Employers fund coverage through private insurers or state funds. No-fault system — injury at work = coverage, regardless of who was negligent. Memory tip: Workers’ comp = employer’s bill, no-fault

Unemployment Insurance Eligibility ★★★★★ : Involuntary separation + sufficient base wages + able/available to work + active job search. Voluntary quit = generally disqualified. Memory tip: UI = involuntary + available + seeking

Unemployment Benefit Amount ★★★★☆ : Typically 40–60% of prior weekly wages up to the state maximum. Standard duration: up to 26 weeks. Memory tip: UI benefit ≈ half your prior wage, up to 26 weeks

Practice Quiz

Q. An employee who voluntarily quits can generally not collect unemployment benefits. What exceptions may apply?

Constructive discharge (employer made working conditions intolerable, forcing the quit), compelling personal reasons recognized by state law (domestic violence relocation, spousal military deployment, medical necessity), and employer misconduct (unreasonable pay cuts, unsafe conditions) may qualify a voluntary quit for benefits. Rules vary significantly by state.

Q. Why is commuting to and from work generally not covered by US workers’ compensation, and what is the exception?

Under the “coming and going rule,” injuries during the ordinary commute are excluded because the employee is not yet performing work duties. The exception — sometimes called the “traveling employee” or “special errand” exception — applies when the travel itself is part of the job (e.g., a salesperson traveling between customer sites, or an employee running a work errand on the way home).