How the Unemployment Insurance Program Works

Businesses with employees are required to register with the Maine Department of Labor, Unemployment Tax Division. The business is assigned an employer account number and a determination is made regarding the businesses liability to pay unemployment taxes. Although most employers are liable for payment of the tax, some are exempt and some can choose to reimburse the state for actual benefits paid out instead of participating in the tax program. If it is determined that the employer is liable for the tax, a tax rate is assigned. An employer record is established in the tax information system.

When the employer pays wages to employees, the employer submits a report each quarter that itemizes the wages paid to each employee. The employer also submits payment of the state unemployment tax with the report based on the taxable wages paid that quarter and the employer's tax rate. The tax payment is recorded in the computer system and added to the trust fund which is used to pay unemployment benefits.

When an employee files a claim for unemployment benefits, a claim record is established in the benefits computer system. The record of the wages paid is used to calculate the claimant's monetary eligibility. This includes both the individual's Weekly Benefit Amount (WBA) and Maximum Benefits Amount (MBA). Redeterminations to the wages can be made if any of the records are incorrect or incomplete. If any of the individual's wages were earned in another state, a combined wage claim can be filed which will result in those wages being transferred to Maine. Prior to paying these monetary amounts, however, the bureau must also determine if the claimant meets all non-monetary eligibility requirements:

  1. The separation from employment must not be the claimant's fault.
  2. The claimant must be able to work and actively seeking employment.
  3. The claimant must submit a weekly claim form for each week of unemployment benefits.

When a claimant's eligibility is questioned, the claimant is notified of the eligibility issue and allowed adequate time to be heard on the issue prior to a decision of benefit eligibility. After the department issues a written determination resolving the eligibility issue, the claimant or the employer can file an appeal if either disagrees with the decision.

If the claimant is determined eligible for benefits, payments are made for each eligible week. Any payments made to claimants are charged, in the tax accounting system, to the former employers of the claimant. If the claimant is paid benefits, but is later determined to be ineligible for those benefits or as the result of an appeal hearing held because the employer disputed the claimant's eligibility, an overpayment of benefits is assessed. The unemployment bureau is responsible for collecting the amount overpaid from the claimant.

The amount of benefits charged to each employer's account for all employees is totaled each year. This total affects the employer's state Unemployment Insurance tax rate for the following years. Employers may protest the charging of their accounts. After the bureau issues written determinations of charges, employers may appeal the determination, if they disagree with it.