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Illinois UI Employer Liability and Employee Eligibility

November 1, 2022 by Wayne Rottger

reviewing UI employer liability in Illinois and UI employee eligibility in Illinois

Unemployment insurance is a federal-state program designed to help people who have lost their jobs by temporarily replacing part of their wages while they look for work. Introduced in 1935, the UI program is a social safety net in which taxes collected from employers are paid into the system on behalf of working people to provide them with this income support. States provide most of the funding and pay for the actual benefits provided to workers while the federal government pays the administrative costs. Since paying federal and state unemployment taxes is not optional, employers should understand their responsibilities when it comes to unemployment tax obligations. Furthermore, unemployment tax rates for employers vary from state to state, so it is important that they meet both their state and federal obligations. To that end, this blog series outlines unemployment insurance requirements in different states, including Illinois UI employer liability employee eligibility.

Illinois UI Employer Liability

Unemployment insurance in Illinois is run by the Illinois Department of Employment Security (IDES). The overall UI employer liability in Illinois is determined by both federal and state law. An employer that is subject to one is usually subject to both. Exceptions include certain types of nonprofit organizations, local governmental entities and the State of Illinois that are subject to only Illinois law.

Employers subject to both the Federal Unemployment Tax Act and the Illinois Unemployment Insurance Act do not have to make the full payments required by the federal Act if they make the proper payments to the state first.

UI employer liability in Illinois is triggered as soon as they have:

  • Paid $1,500 in wages in a single calendar quarter, or employed one or more persons for 20 weeks in a given calendar year;
  • Paid $1,000 in cash wages in one calendar quarter for domestic work; or
  • Paid $20,000 in cash wages in one calendar quarter or employed 10 or more workers for 20 weeks in a given calendar year for farm work.

Non-profit organizations are liable for the year when they have employed four or more persons during each of 20 weeks in a given calendar year while local governmental organizations are liable if they pay wages.​

All employers who meet requirements for UI employer liability in Illinois are required to inform workers about their rights to unemployment insurance benefits. They need to post notices and signs sent to them for that purpose by the IDES. Employers are required to post these notices in conspicuous places in their establishments where they may be seen by employees. Also, if a worker quits, is discharged, or is laid off for an expected duration of seven days or more, employers are required to give them a copy of What Every Worker Should Know About Unemployment Insurance.

Termination of UI Employer Liability in Illinois

Once UI employer liability in Illinois is determined, whether because of their employment experience, by voluntary election, through succession, or because of liability under the Federal Unemployment Tax Act, employers remain liable from year to year thereafter until officially terminated by the Director.

To end UI employer liability in Illinois, an employing unit must file an application for termination of coverage with the Director of Employment Security. This application must be filed by January 31 of the year for which the employer seeks to terminate liability, and they must show that the employment experience in the preceding year was such as to make them eligible to terminate liability.

Illinois UI Employee Eligibility

The IDES collects unemployment insurance taxes from employers who meet requirements for UI employer liability in Illinois and returns the money to eligible Illinois workers as unemployment insurance benefits.

To receive unemployment benefits, workers have to meet certain conditions for UI employee eligibility in Illinois. These conditions are designed to determine that they have been recently employed and are now unemployed through no fault of their own. Employees are eligible for benefits only for weeks in which they meet all of the eligibility conditions and are not subject to disqualification.

General conditions for UI employee eligibility in Illinois are:

  • Workers are unemployed through no fault of their own;
  • Workers were paid $1,600 or more in wages during their base period for insured work;
  • Workers were paid at least $440 of their base period wages at any time during the base period outside the calendar quarter in which their wages were highest; and
  • Workers are registered for work with IDES.

Weekly Benefit Amount

Once UI employee eligibility in Illinois is established, their weekly benefit amount is determined by adding together earnings in the two quarters of the base period when they earned the most, taking 47% of that total, then dividing the result by 26. The current maximum weekly unemployment benefit in Illinois is $484 per week with no dependents. If workers have dependents, the maximum increases to $693.

Illinois also offers an allowance to employees who are married and whose spouses do not work. They may claim the nonworking spouse allowance or the dependent child allowance, but not both.

Keeping Unemployment Rates Low

Both federal and state unemployment insurance can represent a significant cost of doing business. The amount of unemployment tax that employers pay depends on the number of employees who claim and receive unemployment benefits from the State of Illinois as a result of being terminated from a business. As the amount of the benefits increases, employers’ variable rates will also increase.

At the same time, the unemployment tax rate is the only one employers can control. However, this is a challenging and time-consuming process requiring employers to have the time and resources to adequately defend themselves and successfully fight unemployment claims. To effectively handle this costly and demanding task, employers can outsource unemployment claims management. As a result, they can minimize the number of claims and maximize their ability to defend themselves against those that have been filed while staying compliant with federal and state unemployment laws and requirements.