The Illinois Unemployment Insurance Act was enacted to encourage employers to provide stable employment and to accumulate funds systematically allowing wage replacement benefits for those individuals who become unemployed through no fault of their own. More information about the act can be found online at:
Unemployed individuals who meet specific requirements are eligible to receive benefits under the act. The amount of benefits for which an unemployed individual is eligible varies, depending on the employee’s wages prior to being unemployed (wages includes all payments for services, including bonuses and commissions). Benefits are paid out of an Unemployment Compensation Trust Fund, which is funded by contributions from covered employers. Whenever an individual receives benefits, the former employer’s account will be debited. In addition, the employer’s future unemployment taxes will increase, and the claim may affect the employer’s future tax for up to three years.
The act provides procedures for determining whether individuals are eligible for benefits. Employers are permitted to participate in these proceedings. Because an employer’s contribution increases when a former employee receives benefits, it may be to the employer’s advantage to contest claims whenever a former employee should not receive benefits (e.g., misconduct). In addition, the benefits contesting procedures may serve as means of gathering information whenever a former employee has filed or is likely to file, a discrimination charge or other lawsuit against the employer. On the other hand, the procedures provide the employee an opportunity to provide testimony adverse to the employer and, truthful or not, this testimony becomes a matter of record.
Every new business is required to register with the Illinois Department of Employment Security (IDES) within 30 days of start-up. This is done by either registering electronically online through the MyTax Illinois website or by submitting a completed and signed UI-1 form, “Report to Determine Liability Under the Illinois Unemployment Insurance Act.”
Each employer is required by the act to pay contributions equal to the statutorily specified percentages of employment wages paid. For 2022, the initial contribution rate is 3.525% of the first $12,960 in wages paid to each employee per year. The rate remains at 3.252% for an employer whose employment record is chargeable with benefits for less than eight calendar quarters. Once an employer’s employment record has been chargeable for at least eight calendar quarters, then the rate is calculated depending on how successful the employer is in preventing its account from being charged. The maximum contribution rate, however, is 7.625% (except for employers participating in the Short-Term Compensation Program). The minimum and maximum tax rates (based on annual salary up to $12,960 per employee) are 0.001 (or $12.96 per employee) and .725 (or $939.60 per employee). Once an employer is notified of the contribution rate, it has 20 days to file an application for review and redetermination of the rate.
Employers are required to file tax reports with the Department. Failure to do so can result in the imposition of a penalty and in increased tax rates. Also, if an employer fails to make a required report or to pay a contribution owed under the act, it may be prevented from employing individuals until such time as the employer makes the report or pays the contribution. Correct and timely filing of reports and payments will save employers money. Filing of reports and payment of taxes can be done electronically. Certain employers are required by law to file and pay electronically, unless they obtain a waiver from the Department.
To establish an eligible unemployment insurance claim, a person must have worked and earned wages during the first four quarters of the previous five completed quarters prior to filing a claim. This period of time is called the “base period.” The base period changes every three months at the beginning of each new quarter starting in January, April, July and October.
To qualify monetarily, a person must meet each of the following requirements:
In addition to monetary qualification, an unemployed individual is eligible for benefits if the following criteria are met and if the individual is not disqualified for one of the reasons set out in herein in the section entitled, Benefit disqualification on page 483. Requirements for eligibility are as follows:
There is no time limit for filing for unemployment insurance benefits after separation from employment. However, it is to the employee’s benefit to file as soon as possible after separation, since the base period for computing the amount of unemployment benefits is the first four quarters of the last five completed quarters prior to filing.
An unemployed individual is paid benefits that are calculated with regard to his or her wages paid during a base period. The base period consists of the first four of the last five calendar quarters that an individual worked. Weekly benefits are l/26th of the total wages paid during the high quarter. If, however, the weekly benefit amount is not a multiple of $1, then the weekly benefit amount is rounded downward to the nearest full dollar amount. The minimum amount an unemployed individual can receive is $51 per week and the maximum amount per week is $471.
For example, suppose the employee worked for several years for your company. The base period for calculating benefits is the first four of the last five quarters. Reported wages for each of the last five quarters were as follows:
In this example, the high quarter is 2nd Quarter 2020, so that-will be the amount of wages that are used to determine unemployment benefits. Weekly benefits will be $246.15, since that is the amount equal to 1/26 of $6,400; however, because the weekly benefit amount is not a multiple of $1, it is ultimately rounded down to the nearest whole number for a final weekly benefit amount of $246.
An individual can be disqualified from receiving unemployment benefits for the following reasons.
Upon receipt of a “Notice of Claim to Last Employing Unit,” if an employer believes that the claimant may be ineligible for benefits for any reason, it should immediately file a letter or a Notice of Possible Ineligibility (Form ADJ030F) if it wishes to be a party to the claims adjudicator’s determination. If an employer does not file to become a party to a determination, it does not have the right to appeal an adverse determination. This Notice must be mailed by the designated Reply Due Date to:
For additional information or to download forms, visit:
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Unemployment compensation — Illinois
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Appendix A: Recordkeeping requirements
Appendix B: Posting requirements