Arizona Unemployment Insurance – Employer Duties & Employee Benefits

Arizona has an unemployment insurance (UI) program for the benefit of unemployed workers. The cost of benefits paid to unemployed workers is funded by UI taxes paid by Arizona employers. The UI Program is administered by the Arizona Department of Economic Security.

Employers’ Duties

Every employer in Arizona, with limited exceptions, must pay state and federal unemployment taxes. An employer who pays Arizona Unemployment Taxes is allowed to take a credit against its Federal Unemployment Tax. This credit reduces the Federal Unemployment Taxes payable by an employer to 0.6% from 6.0%. An employer must pay state unemployment taxes on the first $7,000 in wages paid to each employee in a calendar year (“taxable wages”).

Employers in Arizona are required to report both gross and taxable wages on Form UC-018, Unemployment Tax & Wage Report. These reports are due on the last day of the month following the end of the previous quarter. (Most Arizona employers receive preprinted quarterly reports by mail in advance of the filing deadline.) If a quarterly wage report is not timely filed, the employer will be assessed a late report penalty of up to $200, and interest of 1% per month on the late payment.

For more information, an employer should obtain the Arizona Employer’s Handbook from the Arizona Department of Economic Security. The Handbook may be obtained from DES online, at www.azdes.gov.

Employees’ Benefits

An employee who becomes unemployed may file a claim for UI benefits. To be eligible for benefits, the employee must have wages in at least two quarters of his base period. The base period is the first four of the last five completed calendar quarters from the date the claim is filed. (For example, if a claim is filed in March, the base period will be the 12-month period, prior to filing the claim, from October 1 through Sep­tember 30.)

An employee must meet certain other requirements to be eligible for UI benefits. The employee must be able to work, available for work, willing to accept suitable work, actively seeking employment, and be out of work through no fault of his own. If an employee voluntarily quits his job, he must show that he quit for good cause. If an employee is terminated or discharged, his employer must show that he was termi­nated for work-related misconduct. (Thus, an employee who is terminated for theft or dishonesty will not be eligible for UI benefits, regardless of his ability or desire to work.)

After an employee files an initial claim for benefits, he will receive a Wage Statement which lists all of the wages paid by his base period employers, and also shows the weekly and total amount of benefits that he may receive if he meets all of the eligibility requirements. Weekly benefits range from $60 to $240, calculated from the employee’s highest quarter base period earnings. An employee may draw UI benefits for up to 26 weeks in the year following his unemployment, depending on how much he earned in his base period.