Does My Former Company Know I'm on Unemployment?

Your former employer is notified when you file a claim for unemployment benefits.
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In most states, the unemployment insurance program is funded exclusively by employers. Because they fund the programs and their rates are based on claims experience, employers are entitled to input on whether any of their former employees meet state eligibility requirements. If you’re collecting unemployment insurance benefits, not only does your former employer know you’re receiving them, in most cases, it also had the option of challenging your right to collect those benefits.

Employer Premiums

    Each state’s rules are different, but they follow the same basic pattern -- each employer pays a periodic premium to the state unemployment insurance fund. Each employer’s premium amount is calculated by applying the premium rate to a portion of the payroll. All states use the amounts of benefits paid to a company’s former employees in calculating its premium rate; some states incorporate additional factors. It’s employers’ interest in keeping their premium rates down that motivates them to challenge the claims of ineligible former employees.


    Unemployment insurance is designed to give temporary financial assistance to people who have lost employment for reasons beyond their own control. They are generally eligible for benefits if, for example, they were laid off for lack of work, their positions were eliminated or the shop closed down. People who were discharged for cause, which includes misconduct connected with the job, are not usually eligible. People who voluntarily quit their jobs usually aren’t eligible for unemployment benefits either, but some states make exceptions for voluntary quitting for good cause, such as an employer’s failure to pay employees or unsafe working conditions. Those who are collecting benefits may have their claims discontinued if they’re not available to take a job or refuse a job offer. Knowingly making false statements to secure benefit payments will result in a denial or cessation of benefits, and it might trigger a host of other consequences.

Strikes and Lockouts

    A particular group of employees for whom the rules are not uniform is workers involved in a labor dispute, whether strike or lockout. This is because unemployment insurance rules state that workers must not only be out of work due to reasons beyond their control, they must also be actively involved in seeking new employment. Most states regard striking workers as having voluntarily left their jobs, and, if they’re walking a picket line and banking on returning to work, they aren’t considered to be seeking new employment. However, non-union workers who get laid off because of a strike may be eligible for unemployment benefits, as well as those who quit, are fired or are replaced during the strike.

    Striking workers are generally not eligible for unemployment benefits.

The Process

    A worker applying for unemployment insurance benefits must advise the agency of pertinent facts, including the employer’s name and address, the length of time with the employer, the last day of work and, most importantly, the reason for the termination of employment. The agency then reviews the worker’s statement with the former employer, in a process that often involves multiple steps and deadlines. The employer may ignore the notification it receives from the agency, in which case, the benefits will usually be paid. The employer may also challenge the worker’s eligibility, for example, by asserting that the worker was discharged for cause. If this happens, the agency will review the statements of both the employer and the worker, together with any documentation they provide, and make a determination. Either side may appeal this determination.

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