When workers become unemployed, they can apply to receive benefits from a state unemployment compensation fund until they find other work. Every employer must pay unemployment insurance on each employee in its organization, and these payments are then placed into the state fund. 

Former employees can receive unemployment compensation only if they are out of work through no fault of their own. Voluntary separation or termination for misconduct may make it difficult for the worker to make a claim for benefits, and employers are entitled to challenge claims for unemployment when they believe the claims are invalid.

Unemployment Insurance: Employee Quits 

If an employee quits, he or she will only be eligible for unemployment insurance compensation if the resignation came about for a valid reason that was somehow caused by the employer. To be eligible, it must be shown that the worker would have suffered some sort of harm or injury if he or she stayed on the job. The standard is whether a reasonable person in the job situation would have remained on the job.

In order to constitute good cause for quitting, the employee's reason must be compelling. Deciding to quit a job because it doesn't offer opportunities for advancement may be a good reason, but it will not be considered compelling by most courts.  Dissatisfaction with the job is also not considered a compelling reason to quit.

For purposes of collecting unemployment insurance compensation, compelling reasons to leave a job may include:

• Harassment.
• Discrimination.
• Substantial reduction in hours or pay.
• Threats of termination or choice of resignation.
• Unsafe or hazardous working conditions.

Unemployment Insurance: Employee is Laid Off 

If an employee is laid off by an employer, or working hours are significantly decreased, the worker will receive unemployment benefits as long as he or she has enough employment tenure to be eligible under the state's program.