Monetary Eligibility Requirements

To see related model state legislation on Monetary Eligibility, click here.

Overview

Unemployment benefits should be available to any worker who is out of a job and looking for work, especially those workers who face systemic barriers to good-paying, full-time jobs due to structural racism and sexism. Yet the overwhelming majority of jobless workers do not receive benefits. Many are shut out of the system due to overly restrictive and outdated requirements that stipulate an individual must have earned a certain amount of wages or worked a certain period of time (or both) prior to applying for unemployment insurance (UI) to be eligible.

These requirements, known as monetary eligibility standards, are designed to measure whether workers have sufficient labor force attachment (i.e., whether they have been working). However, current standards do not reflect the reality of our modern labor market and exclude many underpaid, temporary, and part-time workers, who are disproportionately workers of color, women workers, transgender workers, older workers, and workers with disabilities.[1] Reforming both the base period and the method states use to determine monetary eligibility will help ensure all jobless workers can access UI to support themselves and their families when they are between jobs.

Establishing a worker’s base period

All states assign each worker a base period when they apply for UI. The state then uses the worker’s wages or time worked in that base period to see whether the worker has earned enough, or worked enough time, to be eligible for UI. Almost all states use a year-long base period that consists of the first four of the last five completed calendar quarters (three months per quarter) preceding the filing of the worker’s UI claim.[2]

For example, if a worker applied for benefits in April, their base period would be January through December of the previous year. The state would therefore not include the worker’s most recent earnings (generally three to six months of earnings) in determining eligibility.[3] When UI was first established nearly a century ago, workers’ earnings were reported by employers to state officials via paper records, so the base period was set to account for a record-keeping lag. Now, however, employers submit records electronically, eliminating the need to overlook a worker’s most recent wages.

The outdated practice of disregarding a worker’s most recent pay disproportionately harms underpaid, part-time, seasonal, and temporary workers who tend to experience greater work instability and may not have consistent earnings throughout their base period.[4]

States have attempted to address this issue by adopting an Alternative Base Period for workers who do not qualify using the regular base period. Under an Alternative Base Period, states typically use wage and employment from the worker’s most recently completed quarter, plus any in the filing quarter, to determine eligibility. However, who can use an Alternative Base Period and how it is defined varies by state.

Alternative Base Periods are essential for racial and economic equity within the UI system. In the states that use them, low-paid workers (those in the bottom quartile of all earners) make up over 58 percent of those who qualify for UI because of an Alternative Base Period.[5] As a result of occupational segregation that concentrates workers of color in low-paying, part-time, and seasonal work, Black and Latinx workers are more than 1.5 times more likely than white workers to utilize an Alternative Base Period for their monetary eligibility for UI benefits.[6] Alternative Base Periods can also help immigrant workers who gain status shortly before their unemployment qualify for benefits. Despite this fact, 13 states[7] have not adopted an Alternative Base Period, disproportionately excluding underpaid, Black, and Latinx workers from UI eligibility in those states.

Several states have also adopted an Extended Base Period, which allows workers to count wages and employment further in the past to qualify for benefits.[8] Workers who did not earn wages in their regular base period, typically due to work-related injuries or other illnesses requiring an extended leave from work, are able to use an Extended Base Period to establish UI eligibility.[9] Generally states use the four quarters before the workers’ regular base period for their Extended Base Period. All states limit the use of Extended Base Periods to workers who were disabled, receiving workers compensation, had a serious illness, or had other health-related reasons for not working. However, there are similarly situated workers who need to take an extended leave of absence from the labor market who would also benefit from using an Extended Base Period when they are ready to return to work, particularly family caregivers. This can be particularly important for women of color who disproportionately bear the burden of unpaid family caregiving responsibilities and often must take extended leaves from work due to caregiving.[10] Expanding Extended Base Periods for these family caregivers is an easy step to expanding UI eligibility to many women of color. Extended Base Periods could also benefit workers who experience incarceration after losing their job and are seeking reemployment after they are released.

Establishing the method to determine monetary eligibility

The methods states use to establish monetary eligibility are complex and vary greatly by state. Some states require a fixed amount of earnings across the base period, while others require the worker’s highest-earning quarter to meet a certain threshold along with additional base period earnings. For instance, an Illinois worker needs only $1,600 across their base period, with $440 of those wages outside their highest-earning quarter, to be eligible. In Ohio, on the other hand, workers need at least 20 weeks of work with wages averaging at least 27.5 percent of the state’s average weekly wage ($280 per week in 2022) in their base period, and there must be wages in at least two quarters.[11] Typically states use one or more of the following methods:

• Multiple of high-quarter wages. Under this popular method, a worker must have earned a certain dollar amount during the highest-earning quarter of their base period (the three-month period when they earned the most wages) and must also have earned a certain total amount of wages across their base period that is a multiple of their highest-earning quarter. States using this method generally require the worker to have earned at least 1.5 times their highest-earning quarter wages. For example, if a worker earned $10,000 in their highest-earning quarter, they must have earned another $5,000 during the rest of the base period so that total base period wages would be at least $15,000. States and jurisdictions using a version of this method include Arizona, Alabama, California, the District of Columbia, Indiana, Iowa, Kentucky, Louisiana, Maryland, Michigan, Missouri, Montana, Nevada, New York, North Dakota, Oklahoma, Oregon, Rhode Island, South Carolina, Utah, Vermont, Virgin Islands, and Wyoming.[12]
• Multiple of weekly benefit amount. Under this method, a worker must have earned an amount equal to or greater than a certain multiple of their weekly benefit amount during their base period. For example, if a worker’s weekly benefit amount is $200 and the state requires base period earnings to equal 40 times the weekly benefit amount, the worker will have needed to earn at least $8,000 during their base period to qualify for UI. See our benefit amounts brief for more details. States and jurisdictions using a version of this method include Kentucky, Massachusetts, Mississippi, Puerto Rico, South Dakota, Tennessee, Texas, and Wisconsin.[13]
• Flat qualifying amount. Under this method, workers must earn a certain dollar amount of wages at some point within their base period to qualify. It does not matter when in the base period they were earned. This method is the easiest for workers to understand and for state agencies to implement. No state uses the flat qualifying amount method on its own, but states using a version of this method include Arkansas, Illinois, New Hampshire, New Mexico, Virginia, and West Virginia.[14]
• Weeks or hours of employment. Under this method, individuals must work a certain number of weeks or hours during their base period, often at a certain pay rate, to qualify. For example, a state could require a worker to have worked at least 500 hours earning at least minimum wage to qualify. Only Ohio, Oregon, and Washington utilize a form of this method.[15]

The method a state uses has important equity implications. For example, any monetary eligibility method that only considers a worker’s wages discriminates against low-paid workers, as underpaid workers must work more hours than their higher-paid counterparts to be eligible. In fact, some part-time workers are effectively disqualified from UI in states with higher minimums, such as Ohio, Arizona, and Maine. Similarly, requiring consistent wages and hours across the base period will disproportionately exclude seasonal and temporary workers, who tend to have inconsistent hours and wages throughout the year.  Requiring a worker to have earned a set amount in the highest-earning quarter is likely to disproportionately exclude women, who are more likely to receive low, but steady income.[16]

Federal Requirements and Guidance

There are no federal standards around monetary eligibility. This means state legislatures have complete control in defining the base period and in setting how much an individual needs to have earned or worked during that period to qualify for UI. The lack of federal standards disproportionately impacts Black workers, who are overrepresented in the states with some of the highest monetary eligibility standards.[17] This disparate impact across states highlights the need to implement strong federal standards for setting minimum monetary eligibility requirements so that all workers can receive UI to support themselves and their families while they search for work.

Policy Recommendations

In order to ensure all jobless workers have access to UI, particularly those who have historically been excluded from UI, the federal government should set minimum monetary eligibility standards. In the absence of federal action, states should:

1. Replace the dollar-earnings requirement with an hours-worked requirement. Workers should be eligible if they work at least 300 hours in their base period. Under this standard, a worker who performed 15 hours of work per week for 20 weeks across two quarters (6 months) would be eligible for UI benefits. So far, Washington is the only state to have adopted an hours-worked standard, requiring at least 680 hours of work during a worker’s base period to qualify.[18] Oregon, on the other hand, has a hybrid model that allows individuals who do not meet the dollar-earnings requirement to still qualify if they worked at least 500 hours in their base period.[19]

2. Alternatively, reduce dollar-earnings requirements and adopt a flat-rate formula. If states do not adopt an hours-only approach, they should at least reform the current method of establishing monetary eligibility by adopting a streamlined, flat-rate qualifying amount that sets the dollar-earnings requirement low enough to ensure all underpaid, temporary, and part-time workers can qualify. No state currently has a strictly flat-rate formula. However, Illinois requires a flat $1,600 across the base period with at least $440 outside of the highest-earning quarter.[20] Senator Wyden and Bennet’s Unemployment Insurance Modernization and Recession Readiness Act would establish a federal standard mandating that all workers who earned at least $1,000 in covered wages during the highest-earning quarter of their base period and at least $1,500 in covered wages during their base period would be eligible for benefits.

3. Extend the base period for determining eligibility to six quarters of work. Every worker should be able to qualify for UI using wages (or hours) from one of the six quarters preceding separation. This would include the quarter the worker applies in. So far, no state has adopted a six-quarter regular base period. However, Massachusetts’s regular base period consists of the four completed calendar quarters preceding the worker’s claim effective date and also allows workers to use their wages from the incomplete calendar quarter they apply in if it would result in higher benefits (over 10 percent).[21]

Alternatively, if states do not adopt the six-quarter standard for all workers, they should at least adopt both an Alternative Base Period and Extended Base Period for workers who cannot qualify under the regular base period. The Alternative Base Period allows workers to count their most recent earnings and the Extended Base Period allows workers who may have had to take some time away from work to count earnings further in the past. States should also expand who can use the Extended Base Period to include, parents, family caregivers, and formerly incarcerated people who needed to take an extended leave from work to qualify for UI when they are ready and able to return.

4. Use the “ABC test” to determine whether a worker’s earnings are considered eligible wages. While a full discussion of what is known as the “ABC test” is outside the scope of this section, it is important that states adopt this test to determine whether a worker is an employee (as opposed to an independent contractor) and therefore whether their earnings are considered wages for the purposes of UI eligibility. Most states already use this test to determine UI eligibility, but not all do,[22] and many states lack strong enforcement of the standard. See our finance reform brief for more information.

Use NELP’s monetary eligibility model state legislation to help draft a bill to implement many of these policy recommendations. Please note that the process of drafting legislation can vary depending on state-specific legal and policy issues. For example, existing state UI law may use certain terms or phrases that the model language would not reflect. Similarly, different states laws may not include all sections in the model state legislation.

Research Findings and Arguments to Support Reform

Monetary eligibility standards must be updated to reflect the modern labor market.

Since UI was enacted in the 1930s, the US labor market has transformed in terms of both the workforce and the nature of work. Notably, women’s labor market participation has increased dramatically, with many women becoming breadwinners of their families. There has also been a concerning rise in part-time work, low-paid service jobs, and nontraditional employer-employee relationships through app-based and temporary staffing work. Meanwhile, the UI system remains essentially unchanged. Current monetary eligibility standards that require consistent and high wages throughout the year reflect an outdated system that excludes many underpaid, part-time, and temporary workers who are disproportionately women and workers of color.

Reform of monetary eligibility standards is necessary to maintain economic stability during downturns.

The UI system serves two interlaced purposes: providing income support to workers if they lose their jobs and helping sustain consumer demand during economic downturns by providing a continuing stream of dollars for families to spend in their local economies. UI benefits are one of the most efficient and well-targeted means of economic stimulus: economists find that a $100 increase in government spending on UI leads to $70-$90 in additional economic growth in the private sector.[23] One study found that during the Great Recession, every dollar of UI benefits produced about two dollars of economic impact.[24] UI puts money into the hands of consumers who need it and will spend it quickly, supporting businesses in their communities and stabilizing the state’s economy. By limiting access to UI benefits, states are restraining the effect of UI as an automatic stabilizer, which can harm the state’s economic growth.

Increasing access to UI allows workers to find better-matched jobs, which benefits workers and employers alike.

UI benefits ensure unemployed workers have the resources necessary to seek and maintain long-term employment. Adequate UI benefits ensure workers can afford necessities so they have the time and resources to search for jobs. By providing more time for a worker to search for a job, UI benefits significantly improve job matching.[25] Ensuring workers are matched with the most suitable job benefits workers because they can earn higher wages, have greater job satisfaction, and find longer-term employment stability.[26] It also benefits employers because it makes their businesses more efficient and reduces turnover costs. It is estimated that turnover can cost employers 33 percent of an employee’s annual salary.[27]

Securing UI for workers regardless of their previous earnings or hours worked will provide benefits to more women, transgender workers, people with disabilities, and workers of color.

Due to structural racism and sexism in the economy, workers of color are paid less on average than white workers, and women are paid less on average than men. Similarly, due to systemic sexism and occupational segregation in the labor market, many women workers have been forced into low-paying jobs. Half of working women of color are paid less than $15 an hour, and working women were more likely than men to have shifted from full-time work to part-time work since the pandemic started.[28] In 2021, nearly 6 in 10 part-time workers were women, and workers of color are more likely to be working part-time but want full-time hours. Transgender workers are nearly four times more likely to have a household income under $10,000 per year than the population as a whole.[29] Disabled workers are also more likely to work part-time, and across gender, race, ethnicity, and age, workers with disabilities are less likely to be employed and more likely to work fewer hours and be paid lower wages than their counterparts without at least one disability.[30] Thus, it is essential to lower monetary eligibility standards in order to ensure these workers have equal access to UI.[31]

Data and State Comparison Resources

Compare your state’s monetary eligibility standards to other states.

Consult the US Department of Labor’s (USDOL) annual Comparison of State Unemployment Insurance Laws for a detailed comparison of states’ methods for determining monetary eligibility, including:

• Base period wage and employment requirements (Table 3-2)
• Whether your state has adopted an Alternative Base Period or Extended Base Period, and under what circumstances a worker can use them (Table 3-1)

Find out how many current UI claims are being denied for insufficient wages and compare to other states.

The Century Foundation’s Unemployment Insurance Data Explorer provides updated unemployment data from the USDOL in graphs. Advocates can select their state from a drop-down menu, choose a timeframe, and look at monetary determination rates by quarter. To download a spreadsheet with the number and proportion of workers determined monetarily eligible and ineligible in your state, click the “download data” button underneath the chart. The website also offers resources for comparing states.

This data is also available directly from USDOL via ETA 218 -Benefit Rights and Experience Report, but the Century Foundation website is more user-friendly.

Find the percentage of unemployed workers that receive UI in your state and compare to other states.

Workers’ inability to meet their states’ monetary eligibility requirements is a key reason so many unemployed workers are denied UI benefits. Check the Century Foundation’s Unemployment Insurance Dashboard and click on “How many are getting UI” and “Recipiency Rate” to see the percentage of all unemployed workers in the state receiving UI benefits.

Find and compare your state’s minimum wage to other states.

Use the Economic Policy Institute’s Minimum Wage Tracker to find the current minimum wage in your state. Once you know your state’s minimum wage, you can calculate how many hours a minimum-wage worker would need to work to qualify for UI under current standards. This will help you understand the current gaps in your state’s monetary eligibility requirements and what reforms are necessary to ensure workers earning the minimum wage, working part-time, or in temporary or seasonal positions can qualify for UI.

References and Essential Articles

A Broken Bargain for Transgender Workers, Movement Advancement Project, National Center for Transgender Equality, Human Rights Campaign, and Center for American Progress, September 2013, https://www.lgbtmap.org/transgender-workers.

Josh Bivens et al., Reforming Unemployment Insurance: Section 5 Benefit Levels, Center for American Progress, Center for Popular Democracy, Economic Policy Institute, Groundwork Collaborative, National Employment Law Project, National Women’s Law Center, and Washington Center for Equitable Growth, July 2021, https://s27147.pcdn.co/wp-content/uploads/Reforming-Unemployment-Insurance-June-2021.pdf.

Eliza Forsythe and Hesong Yang, Understanding Disparities in Unemployment Insurance Recipiency, Washington Center for Equitable Growth, July 13, 2022, https://equitablegrowth.org/working-papers/understanding-disparities-in-unemployment-insurance-recipiency/.

Alix Gould-Werth and H. Luke Shaefer, Do Alternative Base Periods Increase Unemployment Insurance Receipt Among Low-Educated Workers?, Journal of Policy Analysis and Management, July 19, 2013, https://doi.org/10.1002/pam.21708.

Lessons Learned from Pandemic Unemployment Assistance Should be Applied to Permanent Reforms of Unemployment Insurance, Joint Economic Committee, September 7, 2021, https://www.jec.senate.gov/public/index.cfm/democrats/2021/9/lessons-learned-from-pandemic-unemployment-assistance-should-be-applied-to-permanent-reforms-of-unemployment-insurance.

Michael Schields and Zach Schiller, Unemployment Compensation for Low-Paid Workers, Policy Matters Ohio, October 18, 2021, https://www.policymattersohio.org/research-policy/shared-prosperity-thriving-ohioans/basic-needs-unemployment-insurance/unemployment-insurance/unemployment-compensation-for-low-paid-workers#_ftnref10.

Shengwei Sun, Part-Time Working Caregivers Need Unemployment Insurance Reform, National Women’s Law Center, June 2022, https://nwlc.org/wp-content/uploads/2022/06/NWLC_FactSheets_CaregiverUI_v2.pdf.

Jasmine Tucker and Julie Vogtman, When Hard Work is Not Enough: Women in Low-Paid Jobs, National Women’s Law Center, April 2020, https://nwlc.org/wp-content/uploads/2020/04/Women-in-Low-Paid-Jobs-report_pp04-FINAL-4.2.pdf.

Endnotes

[1] Amy Traub and Kim Diehl, “Reforming Unemployment Insurance is a Racial Justice Imperative,” National Employment Law Project, February 28, 2022, https://www.nelp.org/publication/reforming-unemployment-insurance-is-a-racial-justice-imperative/.

[2] “Comparison of State Unemployment Insurance Laws 2021,” US Department of Labor, 2021, 64­­–66,  https://oui.doleta.gov/unemploy/pdf/uilawcompar/2021/complete.pdf.

[3] Minnesota and Massachusetts are exceptions to the general rule as both use the four completed calendar quarters preceding the first day of the benefit year.

[4] See “Temp Workers Demand Good Jobs: Survey reveals poverty pay, permatemping, deceptive recruitment practices, and other job quality issues,” February 2022, https://s27147.pcdn.co/wp-content/uploads/Temp-Workers-Demand-Good-Jobs-Report-2022.pdf; Jasmine Tucker and Julie Vogtman, “When Hard Work is Not Enough: Women in Low-Paid Jobs,” National Women’s Law Center, April 2020, https://nwlc.org/wp-content/uploads/2020/04/Women-in-Low-Paid-Jobs-report_pp04-FINAL-4.2.pdf.

[5] Andy Stettner, Heather Boushey, and Jeffrey Wenger, “Clearing the Path to Unemployment Insurance for Low-Wage Workers: An Analysis of Alternative Base Period Implementation,” National Employment Law Project and Center for Economic and Policy Research, August 2005, http://www.cepr.net/documents/publications/unemployment_2005_08.pdf.

[6] Id.

[7] Thirteen states without an Alternative Base Period are: AL, AZ, FL, IN, KY, KS, LA, MO, MS, ND, PA, TN, TX, and WY. “Comparisons of State Unemployment Insurance Laws.”

[8] Twenty-five states have an Extended Base Period: AK, AR, AZ, CT, ID, IL, IN, IA, KS< KY, MS, MA, MN, MT, NV, NC, OK, OR, PA, RI, SDI, TN, TX, UT, and WY. “Comparisons of State Unemployment Insurance Laws.”

[9] Id.

[10] Shengwei Sun, “Part-Time Working Caregivers Need Unemployment Insurance Reform, National Women’s Law Center,” June 2022, https://nwlc.org/wp-content/uploads/2022/06/NWLC_FactSheets_CaregiverUI_v2.pdf.

[11] Michael Schields and Zach Schiller, “Unemployment Compensation for Low-Paid Workers,” Policy Matters Ohio, October 18, 2021, https://www.policymattersohio.org/research-policy/shared-prosperity-thriving-ohioans/basic-needs-unemployment-insurance/unemployment-insurance/unemployment-compensation-for-low-paid-workers#_ftnref10.

[12] “Comparisons of State Unemployment Insurance Laws.”

[13] Id.

[14] Id.

[15] Id.

[16] Heidi Hartmann, “Women can face challenges accessing unemployment insurance benefits,” National Academy of Social Insurance, March 10, 2022, https://www.nasi.org/discussion/unemployment-insurance-and-women-workers/.

[17] Christopher J. O’Leary, William E. Spriggs, and Stephen A. Wandner, “Equity in Unemployment Insurance Benefit Access,” W.E. Upjohn Institute for Employment Research, January 11, 2022, https://research.upjohn.org/cgi/viewcontent.cgi?article=1087&context=presentations.

[18] Wash. Rev. Code § 50.04.030, https://app.leg.wa.gov/rcw/default.aspx?cite=50.04.030#:~:text=An%20individual’s%20benefit%20year%20shall,the%20individual’s%20prior%20base%20year.

[19] Or. Rev. Stat. § 657.150(2), https://oregon.public.law/statutes/ors_657.150.

[20] Ill. Comp. Stat. Ch 820 § 405/500(E), https://www.ilga.gov/legislation/ilcs/fulltext.asp?DocName=082004050K500.

[21] Mass. Gen. Laws Ch. 151A § 1, https://malegislature.gov/laws/generallaws/parti/titlexxi/chapter151a.

[22] “Comparisons of State Unemployment Insurance Laws.”

[23] Gabriel Chodorow-Reich, “Geographic Cross-Sectional Fiscal Spending Multipliers: What Have We Learned? National Bureau of Economic Research,” July 2017, https://www.nber.org/papers/w23577; Marco Di Maggio and Amir Kermani, “The Importance of Unemployment Insurance as an Automatic Stabilizer,” National Bureau of Economic Research,” September 2016, https://www.nber.org/papers/w22625.

[24] Wayne Vroman, “Role of Unemployment Insurances as an Automatic Stabilizer During a Recession,” July 2010, https://wdr.doleta.gov/research/FullText_Documents/ETAOP2010-10.pdf.

[25] Ammar Farooq, Adriana Kugler, and Umberto Muratori, “The Impacts of Unemployment Benefits on Job Match Quality and Labour Market Functioning,” February 7, 2021, https://voxeu.org/article/unemployment-benefits-job-match-quality-and-labour-market-functioning.

[26] Id.

[27] Valerie Bolden-Barrett, “Study: Turnover costs employers $15,000 per worker,” HR Drive, August 11, 2017, https://www.hrdive.com/news/study-turnover-costs-employers-15000-per-worker/449142/.

[28] Sun, “Part-Time Working Caregivers.”

[29] “A Broken Bargain for Transgender Workers,” Movement Advancement Project, National Center for Transgender Equality, Human Rights Campaign, and Center for American Progress, September 2013, https://www.lgbtmap.org/transgender-workers.

[30] Mia Ives-Rublee, Lily Roberts, and Rose Khattar, “Removing Obstacles for Disabled Workers Would Strengthen the US Labor Market,” Center for American Progress, May 24 2022, https://www.americanprogress.org/article/removing-obstacles-for-disabled-workers-would-strengthen-the-u-s-labor-market/.

[31] See also Traub and Diehl, “Reforming Unemployment Insurance.”