FAQ Friday – Who really pays for unemployment insurance?

Q: Is unemployment insurance deducted from my paycheck?

Employers actually pay the payroll tax that finances unemployment insurance benefits and when a former employee leaves a job and starts to collect benefits, the employer’s payroll tax rate increases accordingly, even though that employee no longer works for their firm. Some unemployment insurance claimants continue to collect benefits long after they returned to work because they believe they paid into the fund and think they are entitled to the money. When that happens, they end up getting charged with fraud instead.