unemployment compensation
Definition
Unemployment compensation is money the government pays to workers who lost their jobs through no fault of their own, like a layoff. As a business owner, you fund this program through taxes you pay on your employees' wages, and former employees can file claims against your account when they lose their jobs.
Example
If you have to lay off three employees because business slows down, those workers can apply for weekly payments from the state unemployment program while they look for new work.
Watch Out
Your tax rate for this program can go up if many of your former employees file successful claims, so contesting false or unfair claims is worth your time and effort.
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This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.