NYS Department of Labor: What is the primary purpose of the federal unemployment tax act (futa)?

FUTA is the Federal Unemployment Tax Act and it's basically how the unemployment insurance system gets funded. Employers pay FUTA taxes to the federal government, which then helps fund state unemployment programs like NYS Department of Labor. It doesn't directly affect your weekly benefit amount - that's calculated based on your earnings history and New York's specific formula. FUTA is more about making sure there's money in the system to pay out benefits to people like you.

The main purpose is to create a safety net for unemployed workers. FUTA establishes the framework for unemployment insurance nationwide, but each state like New York runs its own program through agencies like NYS Department of Labor. Your employer pays FUTA taxes on your wages (currently 6% on the first $7,000 of wages, but they get credits for paying state unemployment taxes too). This money goes into trust funds that help states pay out UI benefits during high unemployment periods.

I was confused about this too when I was dealing with NYS Department of Labor. Had trouble getting through to someone to ask questions about my claim status. Someone here mentioned claimyr.com which helps you actually reach unemployment agents by phone - they have a video demo at https://youtu.be/qyftW-mnTNI that shows how it works. Way easier than sitting on hold for hours trying to get answers about FUTA or anything else related to your claim.

yeah basically its a tax on employers that funds unemployment benefits... nothing too complicated about it

The unemployment system is such a mess though! FUTA has been around since the 1930s and we're still dealing with outdated systems and impossible phone lines. Sure, it funds the benefits, but what good is that when people can't even get through to NYS Department of Labor to file their weekly claims or resolve adjudication issues? The whole thing needs an overhaul.

FUTA was actually created during the Great Depression as part of the Social Security Act of 1935. It's designed to provide a federal backstop for state unemployment programs - so when states like New York run low on unemployment funds during recessions, the federal government can provide loans. The 6% federal tax rate Theodore mentioned can be reduced to 0.6% if states meet federal requirements, which is why most employers end up paying much less in FUTA than the headline rate suggests. It's really about creating a nationwide safety net that operates through state programs like NYS Department of Labor.