Unemployment Insurance Compensation
New Jersey’s unemployment insurance (UI) compensation system was originally established in 1935 to provide temporary partial wage replacement to individuals who lose their jobs through no fault of their own. The UI system operates as a federal-state partnership. The federal government sets broad requirements for its administration and for the states, and also determines the details of eligibility and program operation. General information concerning the system is provided below.
—Who is eligible to collect unemployment insurance benefits?—
To be eligible for benefits, an individual must have earned the minimum wage for at least 20 hours a week over a period of 20 weeks or at least 1,000 hours over the course of a year. Thus, for 2018 an individual must have earned at least $169 per week for 20 weeks or at least $8,500 during the base year. (A base year is defined as the first four of the last five completed calendar quarters.) The individual must also be available and able to work and be actively seeking employment. Finally, the individual must not be disqualified from benefits for any of the reasons set forth below.
—Who is disqualified from receiving unemployment insurance benefits?—
Generally, UI benefits are available to individuals who, in most instances, have lost their jobs through no fault of their own. Those who quit voluntarily, are discharged for misconduct, or stop work over a labor dispute may not be eligible for benefits. A 2010 law (P.L. 2010, c.37), alters these eligibility requirements and modifies the rules concerning when an individual may re-qualify for benefits by creating a three-tiered misconduct system (simple, severe, gross). Under the previous statutory system, about 90 percent of the misconduct cases had the same penalty without regard to the individual’s level of misconduct.
Currently, with the revisions set forth in P.L.2010, c.37, claimants who are discharged for misconduct must wait eight weeks before collecting benefits, and claimants who are discharged for “severe” or “gross” misconduct are disqualified from receiving benefits. Examples of “severe misconduct” are: use of drugs/alcohol on the job, repeated violations of a company rule, repeated lateness or absences after receiving a written warning from an employer, destruction/theft of company property or misuse of benefits. Gross misconduct includes crimes of the first, second, third or fourth degree.
Pursuant to the law, an individual who has been discharged for severe misconduct shall be disqualified from collecting UI benefits until he or she becomes reemployed, works for at least four weeks and earns at least six times the individual’s weekly benefit rate. An individual who has been discharged for gross misconduct or who leaves work voluntarily shall be disqualified from collecting benefits until he or she becomes reemployed for eight weeks and earns 10 times his or her weekly benefit amount.
— How is the state’s Unemployment Insurance Compensation system financed?—
The UI system is financed with contributions made by both employers and employees in the form of tax payments to the Unemployment Insurance Trust Fund. While employees pay a flat tax rate of 0.03825 percent on the first $33,700 in wages earned in 2018, employers pay a variable rate ranging from 0.4 percent to 5.4 percent on the first $33,700 in wages paid to each employee. The tax rates paid by employers fluctuate depending upon the employer’s “experience” with unemployment insurance claims. Thus, employers’ rates will rise as the number of workers they terminate increases.
The level of taxes paid by employers is affected not only by their “experience rating,” but also by the overall health of the UI trust fund. State law establishes five separate tax columns, with column A having the lowest tax rates and column E having the highest tax rates. When the UI trust fund is healthy and its reserves are high, the lower tax rates in column A take effect. When fund reserves decrease, there is a shift to the higher columns and tax rates. As of November 1, 2013, the UI trust fund was considered solvent. As a result, employers will pay rates in column C for 2017-2018. These rates could decrease in future years as reserves continue to grow.
— Which employers must participate in and contribute to the UI system?—
New Jersey employers who pay at least $1,000 per year in wages to one or more employees are likely subject to the provisions of the UI law. However, certain services are exempted from coverage, and contributions need not be made for independent contractors doing business with a company. In addition, nonprofit organizations that are exempt under 501(c)(3) of the IRS code may elect to reimburse the UI fund for benefits paid in lieu of making quarterly contributions like other employers. Employers should contact the Division of Employer Accounts in the State Department of Labor and Workforce Development (DOLWD) at 609-633-6400 to find out if they are subject to the law.
—What is the weekly benefit rate for an eligible claimant?—
The weekly benefit rate is equal to 60 percent of the individual’s average weekly wage, up to a maximum of 56 2/3 percent of the statewide average of weekly wages paid to all employees covered by the unemployment compensation law. The maximum weekly benefit rate for 2018 is $681 per week. Generally, benefits may not be collected for more than 26 consecutive weeks. However, in the past, special “extended benefits” have been offered at times of high unemployment to workers who exhaust their regular UI benefits.
— What is the weekly rate for individuals with dependents?—
The weekly benefit rate for individuals with dependents is increased by 7 percent for the first dependent and 4 percent for the next two dependents, up to a maximum of three dependents and a 15 percent benefit increase. In order to be eligible for dependency benefits, the claimant’s spouse must also be unemployed. A “dependent” is defined as the claimant’s unemployed spouse or civil union partner, or unmarried child, stepchild or adopted child under the age of 19 (22 if attending an educational institution).
— What are an employer’s pre-claim reporting obligations?—
Every employer is required to maintain certain information concerning their employees including payroll records for the current year and the four preceding years for each pay period. The payroll records must include the beginning and ending dates of the pay period, the employee’s full name, address and social security number, the days of the week on which the employee worked and is credited compensation, and the total amount and value of compensation paid to each employee. A full listing of these requirements is available at:
Employers must also file an “Employer Report of Wages Paid” (WR-30) form within 30 days of the end of each quarter. Reports can be filed electronically at https://www1.state.nj.us/TYTR_BusinessFilings/jsp/common/Login.jsp?taxcode=45
Under the “Millville Dallas Airmotive Plant Job Loss Notification Act,” P.L. 2007, c.212, 60 days prior to effectuating a mass layoff, every New Jersey employer with 100 or more employees must notify the NJ Department of Labor and Workforce Development, the chief elected official of the municipality where the business is located, and any affected employees and bargaining units. A mass layoff is defined as the termination of 500 or more full-time employees or 50 or more full-time employees representing one-third or more of the workforce at the establishment. If unemployment occurs because of a labor dispute, the employer must notify the Division of Unemployment Insurance at 609-777-4974.
Finally, an employer must provide each terminated employee with a Form BC-10, “Instructions for Claiming Unemployment Benefits.” This form can be obtained by visiting https://www.nj.gov/labor/forms_pdfs/ui/BC-10.dot.
—Can an employer be responsible for paying benefits for an individual who becomes unemployed under another employer?—
Yes. The amount of unemployment insurance benefits that a claimant is eligible to receive is directly related to his actual earnings during the base year. A base year is defined as the first four of the last five completed calendar quarters. Thus, the eligibility of a person who seeks to collect unemployment in April 2018 will be based on his employment from January 1, 2017 to December 31, 2017. If the claimant worked for more than one employer during the period on which his benefits are based, the employer is then charged in proportion to the amount of wages that the employer paid the claimant during the base year to the total wages received during that period. In this case, all base year chargeable employers would share in the cost of each week of benefits payments.
As discussed below, an employer has the right to appeal a determination of benefits. Individuals who voluntarily quit employment or are discharged for misconduct, as determined by the DOLWD, may not be eligible for benefits.
—Can an employer challenge or appeal a benefits determination?—
The unemployment compensation law provides a mechanism for employers to appeal determinations or decisions of the Division of Unemployment Insurance. The appeals process has two administrative levels: the Appeals Tribunal and the Board of Review. Decisions of the Board of Review may be appealed to the Appellate Division of the Superior Court.
A determination becomes final unless a written appeal is filed within seven calendar days after delivery or within 10 calendar days after the mailing of the determination. An appeal period can be extended if good cause for late filing is shown. Good cause exists in situations where it can be shown that the delay was due to circumstances beyond the individual’s control that could not reasonably have been foreseen or prevented.
To file an appeal, you must mail or fax your appeal to:
New Jersey Department of Labor and Workforce Development
PO Box 907
Trenton, NJ 08625-0907
— For More Information—
For a detailed description of employer rights and responsibilities under the NJ Unemployment Insurance system, request a copy of the Employer Handbook: New Jersey’s Unemployment & Disability Insurance Programs from the New Jersey Department of Labor at 609-777-3200. You can also access a copy of the handbook at
If you need additional information, please contact NJBIA’s Member Action Center at 1-800-499-4419, ext. 3 or email@example.com.
This information should not be construed as constituting specific legal advice. It is intended to provide general information about this subject and general compliance strategies. For specific legal advice, NJBIA strongly recommends members consult with their attorney.