Who pays for EDD unemployment benefits - employer or government?

Technically, it's your employer who pays for your unemployment benefits, but indirectly. All employers in California pay unemployment insurance taxes to the EDD based on their payroll and claims history. These taxes go into a dedicated fund that's used exclusively to pay out unemployment benefits. The government (EDD) just administers the program and distributes the money, but the actual funding comes from employer contributions, not general tax revenue or the state budget.

To add to what the previous person said, employers pay both Federal Unemployment Tax Act (FUTA) and State Unemployment Tax Act (SUTA) taxes. The rate each employer pays can increase if they have a lot of former employees collecting benefits - this is called an "experience rating." So yes, when employees collect unemployment, it can potentially cost employers more in the long run through higher tax rates. That's one reason some employers contest claims they believe aren't valid.

I worked in HR for 10 years and can tell you it's DEFINITELY the employers who pay!!! My company's UI tax rate went up by 2.3% one year because we had a bunch of layoffs and it cost us THOUSANDS in additional taxes the next year!!! That's why some companies will fight tooth and nail against legitimate claims - it's ALL about their bottom line not about whether you deserve benefits!!! The whole system is rigged to make employers try to prevent workers from getting what they're entitled to!!!

i think its the government that pays it. cuz when i was on unemployment during covid the extra $600 came from the feds right? so its gotta be government money

If you're having trouble with your claim and need to talk to someone at EDD, I was in the same boat last month. Spent days trying to get through on the phone and kept getting disconnected. Someone recommended Claimyr to me and it actually worked! They connect you with an EDD rep without the endless redial game. Saved me hours of frustration. Their site is claimyr.com and they have a video showing how it works: https://youtu.be/JmuwXR7HA10?si=TSwYbu_GOwYzt9km

Everyone's mostly right but missing a key detail - during normal times, UI is funded by employer taxes. But during economic downturns when the state UI fund runs out of money (which happened during COVID), California borrows from the federal government to keep paying benefits. So technically, in those situations, it can be taxpayer money initially, but employers still end up paying it back through higher taxes later. California actually still owes billions to the federal government from COVID-era loans.

my boss told me once that unemployment is kinda like car insurance for jobs lol. companies pay premiums (taxes) and then when someone needs to use it (gets laid off) the insurance pays out. and just like with car insurance if u file too many claims ur rates go up!

Just to clarify one more thing for @Freya - your former employer won't directly feel the impact of your specific claim right away. The experience rating system looks at claims over a longer period (usually 3-4 years) and the tax rate adjustments happen annually. So while your claim does technically contribute to their future costs, it's not like they get a bill for your weekly benefit amount. The system is designed to spread the cost across time and multiple employers. As for how they might treat your claim - if you were legitimately laid off (not fired for misconduct), they shouldn't contest it since layoffs are exactly what unemployment insurance is meant to cover.

Adding to what everyone has shared - as someone who's been through this process recently, I can confirm that the system is indeed funded by employer taxes, not your personal income taxes or general government funds. One thing that might help ease your mind is that since you were laid off (not fired for cause), your former employer shouldn't have any reason to contest your claim. Layoffs are considered "no-fault" separations, which is exactly what unemployment insurance is designed to cover. The fact that you worked there for 3 years also works in your favor - you've definitely earned these benefits through your work history. Don't feel guilty about collecting what you're entitled to!

Just wanted to add something that might help you feel more confident about your claim - California has some of the strongest worker protections when it comes to unemployment benefits. Since you mentioned you worked in retail for 3 years before being laid off, you've definitely built up sufficient work history and earnings to qualify. The EDD typically processes legitimate layoff claims pretty smoothly since there's no misconduct involved. One tip: make sure to keep any documentation from your employer about the layoff (like a termination letter or WARN notice if they provided one) just in case, but honestly, straightforward layoff cases rarely get contested. You've earned these benefits through your years of work, so don't hesitate to use them while you're job searching!