Employer Contestations and Access to Unemployment Insurance: Implications for Benefit Receipt, Material Hardship, and Administrative Burden

Employers have a direct financial interest in the federal-state unemployment insurance (UI) system. Employer taxes, which generally increase when an employer’s former employee receives benefits, usually fund UI. Employers may contest workers’ eligibility, aided by a growing claims-management industry. Yet scholars know little about this practice’s relationship with benefit receipt, in part because we lack publicly available administrative data. To fill this gap, we draw from an original, nationally representative survey of US workers who experienced unemployment between 2019 and 2024. In our national sample, a quarter of jobless workers report contestation—a figure higher than past studies focused on single states. Yet more than a third of these workers go on to claim benefits successfully, suggesting that employers frequently contest likely eligible claims. Further, employers more often contest less-educated workers’ claims, which may help explain disparities in access to UI by educational attainment. Workers who report contestations are less likely to claim benefits and report higher rates of material hardship and administrative burden. Our analysis provides a fuller picture of employers’ role in UI administration and suggests that policy makers should consider the trade-offs associated with the employer role in UI benefit administration.