Mandatory unemployment insurance systems are financed by taxes on employers under both federal and state legislation. Such legislation determines the benefits available, the definition of wages and employment, the manner in which contributions are taxed, and the class of persons entitled to unemployment compensation benefits.
State statutes generally provide for administrative review of determinations respecting claims for unemployment compensation benefits when appeals are filed by either the claimant or an aggrieved employer whose tax liability may be affected by an award of benefits. Judicial review of such administrative action, while generally available by mandamus or a petition for declaratory relief, is typically narrow in scope and courts will not ordinarily overrule administrative findings if supported by substantial evidence. For federal income tax purposes, unemployment compensation benefits are taxable as part of the recipient's gross income.
