Wage Replacement and Wage Protection

Unemployment insurance gives workers, who have lost their jobs through no fault of their own, monetary payments for a given period of time or until they find a new job. This policy is designed to sustain consumer spending during periods of recession--and to prevent financial distress during periods of joblessness.

In the United States, unemployment insurance operates through a combination of federal and state statutes. The program was established by the federal Social Security Act in 1935. Each state operates its own unemployment insurance program, which must be approved by the Secretary of Labor, based on federal standards. A combination of federal and state law determine which employees are eligible for compensation, the amount they receive, and the period of time benefits are paid.

State and federal taxes support this system of compensation. States base employer contributions on the amount of wages the employer has paid, past contributions to the unemployment fund, and the amount that the discharged employees have already been compensated.

We will consider two of the main dimensions of unemployment insurance regimes: the requirement to make a good-faith search for work and the definition of "good cause" for quitting a job. 

We will also consider the overtime protections available under the Fair Labor Standards Act. The law was originally intended to address exploitative practices like child labor—and to ensure that every covered employee minimum wage and overtime. See 29 U.S.C. §206(a)-(b), 207(a)(1) (2018). However, the FLSA’s overtime provisions do not limit the number of hours an employee may be required to work and thus the statute does not protect from discharge workers who refuse to work overtime. 

The FLSA and implementing DOL regulations include a variety of exemptions to both the minimum wage requirements and the overtime provisions. Perhaps the best-known FLSA exemptions are the “white-collar” exemptions, which cover “any employee employed in a bona fide executive, administrative, or professional capacity.” See 29 U.S.C. §213(a)(1). Application of these exemptions can be incredibly fact-intensive and complex. We will focus less on these exemptions than on the application of the FLSA to employees who are "on call."