New York Unemployment Compensation Law

New York’s unemployment compensation law, like that of many other states, provides temporary payments to employees who lose their jobs through no fault of their own. The program draws from a public policy that assumes “unemployment is a serious menace to the health, welfare and morale” of the citizens of New York, and is designed to lighten the job-loss burden for workers and their families.

The New York State Department of Labor administers the law through its Workforce New York initiative ( Employees don’t contribute to the unemployment compensation program, which employers fund entirely.

The law is complex and in some cases holds an employer liable for unemployment insurance (UI) payments even when a former employee wasn’t fired but quit.

You’re required to inform employees about the state’s unemployment compensation program any time they go off the payroll, regardless of the reason. Notification must include your company name, your New York State Employer Registration Number, the mailing address where you keep payroll records, and instructions on how the employee should provide the information on a form to the unemployment insurance claims center. (You can download a copy of the form at

Employees who are eligible for UI payments are entitled to approximately 50 percent of their average weekly wage, up to a maximum of $405 per week (low-income workers receive a slightly higher percentage). Usually, they can collect payments for up to 26 weeks. If employees on unemployment find part-time work, they may still be eligible for benefits, but at a reduced level based on how many days per week they work if they earn more than $405 weekly. Those earning less than $405 weekly won’t see any reduction in their benefits.

As a general rule, former employees are eligible for unemployment compensation when they’re not responsible for their dismissal. In other words, unless you fired someone for cause, he/she is probably entitled to unemployment benefits.

When you terminate an employee, the burden of proof is on you. That may sound simple, but it’s not. You must state the reason for a discharge or termination if you intend to claim that an employee was guilty of misconduct. Be prepared to prove that you fired the employee for a solid reason (for cause), such as stealing, cheating, a safety infraction, harassment or discrimination. Employees who quit may still qualify for benefits, but the burden of proof lies with them to show they quit “for good cause.”

It’s a good idea to run any discharge for cause by your attorney. Reason: When you state a reason for unemployment compensation purposes, that may tie your hands later if the employee sues you for discrimination.

As the employer, you will receive notice when the state Department of Labor determines that a former employee is eligible for benefits. You then have the right to file a written appeal, but watch the deadline: You must reply within 30 days of the date you received the notice.

If you anticipate experiencing a temporary work slowdown and layoff of at least five people, you may want to participate in New York’s voluntary Shared Work program. It enables employers to cut back hours and workers to remain employed while still receiving partial UI benefits. The advantage: You won’t have to train new hires when business picks up again. For details about the program, go to

Tricky scenarios for eligibility

Here are some common tricky situations involving eligibility (or ineligibility) for unemployment compensation:

Misconduct. Employees who are fired for gross misconduct, such as a crime under New York law, can’t collect unemployment. Exception: Fired employees who take another job will again become eligible if their new employers discharge them through no fault of their own. To qualify, they must have earned at least five times the weekly benefit they would have received had their former employer not fired them for gross misconduct.

Trailing spouse. In this day of dual-career families, a husband or wife may quit a job when the spouse accepts a position in another city or state. While some states do allow UI benefits for a trailing spouse, New York doesn’t consider this a good cause connected with work. Therefore, trailing spouses aren’t eligible for benefits.

Domestic abuse. Employees who quit their jobs to protect themselves or their children from the threat of domestic abuse may still collect benefits, although the employer’s account isn’t charged. This scenario may arise if an abused spouse, fearing the abuser can track her down at work, needs to go into hiding.

Retirement pay. Employees who are eligible for Social Security retirement benefits can still collect unemployment. But if they begin collecting on a company-sponsored retirement plan, they may receive reduced weekly benefits, subject to certain limitations:

  • If the claimant is collecting benefits from only one employer-sponsored pension plan, the pension benefit offsets the UI benefit in the same way that part-time earnings do.
  • If the claimant is receiving benefits from two employers’ accounts, the pension offset applies to only 50 percent of the benefits.

Visa holders. Foreigners working in the United States on H-1B visas aren’t eligible for UI benefits if their employers permanently terminate them. That’s because H-1B visa holders are authorized to work for only one employer and thus wouldn’t be ready, willing and able to seek other employment. But if the same workers are only temporarily laid off and have a specific return date, they can collect unemployment.

Ready and able to work. To be eligible for UI benefits, claimants must be physically and mentally capable of working. So, if a person on unemployment is hurt in a car accident, for example, his or her benefits will stop until being cleared to return to work.

Elder care, child care and transportation. Claimants who must care for family members or don’t have transportation to and from work may not be eligible for benefits. Because their time commitments and transportation problems prevent them from accepting a job immediately, they’re not ready and able to work.

Active job search. To receive UI payments, claimants must actively seek work: i.e., contact at least three employers per week about job openings. Some claimants may be asked to keep records of their attempts to find a job.

Refusing a job offer. Even though claimants must search for jobs, they’re not required to accept just any job right away. During the first 13 weeks of benefits, jobseekers must accept only work for which they “are reasonably fitted by training or experience.” But after the 13-week mark, they must take any job whether they are “reasonably fitted to it” or not so long as the job pays the lower of (1) the prevailing wage for that type of work in their geographic area or (2) 80 percent of the highest wages they earned in the five quarters prior to receiving benefits. They don’t have to accept jobs that pay less than those requirements.

Representing your organization at a hearing

Employers should carefully consider whether they want to contest an unemployment claim and, ideally, consult an employment- law expert about the best course of action. This is true especially if you suspect the employee might file a discrimination lawsuit against your company. What you say about your organization’s actions can come back to haunt you, especially if the former employee’s attorney uses the relatively low-stakes unemployment setting to fish for information for a lawsuit against you. Your stated reason for firing an employee may bind you in a later, high-stakes lawsuit.

For example, if you testify that you fired an employee because of frequent absences, the records you produce could be used later to show you violated the FMLA when you counted a sick-child call-off as an unexcused absence.

That’s why it’s best to run your expected testimony and documentary evidence by an attorney before representing your organization at a hearing. You don’t want to say anything that could turn into ammunition against you later, or be silent about something that would prevent you from putting on evidence later.

Sometimes, it may be best to have an attorney handle the entire UI case. Other times, if you and your attorney think a former employee will likely file a state or federal discrimination lawsuit, it may be better to forgo a hearing to avoid showing your cards too early. Not contesting an unemployment claim won’t prevent you later from showing you fired the employee for a legitimate reason. 

Excerpted from New York’s 10 Most Critical Employment Laws, a special bonus report available to subscribers of HR Specialist: New York Employment Law