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Quarterly Census of Employment and Wages

Federal Unemployment Insurance Employment Coverage Timeline

Unemployment Insurance differs from state to state, but all states must adhere to certain guidelines set by federal standards. The following is a timeline of the adjustments made to the federally mandated coverage required by all states. For the complete Chronology of Federal Unemployment Compensation Laws, go to

Relevant definitions

  • In general, employees are individuals who have employee status under usual common law rules.
    • According to IRS rules, an individual is an employee if the relationship between the individual and the person for whom the service is provided has the legal relationship of employer and employee. That is, the employer has the right to control and direct the employee, not only as to the work to be done, but also as to the details and means by which the work is done.
  • Employment means any services performed by an employee for the person employing him unless specifically excluded from the definition of employment in FUTA.

For more information about the Coverage Conformity Requirements for State UC Laws, go to

1935 – 40

  • L. 74-271, approved August 14, 1935 (HR 7260)
    • Social Security Act
    • Declared constitutional by the U.S. Supreme Court May 24, 1937.
    • Establishes the basic framework of the Federal-State system of unemployment insurance.
      • Substantial State autonomy over all substantive elements of self-contained unemployment insurance laws.
    • These provisions have not been fundamentally altered in 50 years.
    • Establishes coverage for employers of eight or more workers.
    • Excludes coverage from:
      • Agricultural labor;
      • Domestic service in a private home;
      • Service performed as an officer or member of a crew of a vessel on the navigable waters of the United States;
      • Service performed by an individual in the employ of his son, daughter, or spouse, and service performed by a child under the age of twenty-one in the employ of his father or mother;
      • Service performed in the employ of the United States Government or of an instrumentality of the United States;
      • Service performed in the employ of a State, a political subdivision thereof, or an instrumentality of one or more States or political subdivisions;
      • Service performed in the employ of a corporation, community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual.”
    • L. 75-722, approved June 25, 1938 (HR 10127)
      • The Railroad Unemployment Insurance Act
      • Provides for a special Federal system of unemployment insurance for the railroad industry, which is excluded from the Federal unemployment tax.
    • L. 76-379, approved August 10, 1939 (HR 6635)
      • Social Security Act Amendments of 1939
      • Adds further coverage exclusions, including:
        • Newsboys under 18.
        • Student nurses and interns in a hospital.
        • Insurance agents or solicitors on commission only.
        • Domestic service in a college club or fraternity.
        • Casual labor not in the employer’s trade or business.
        • Students employed in a school where they are enrolled, if they earn $45 or less in a calendar quarter.
      • Extends coverage to:
        • Federal instrumentalities not wholly owned by the Federal Government, such as national banks and State bank members of the Federal Reserve System.
        • Instrumentalities not wholly owned by State and local governments, unless they have constitutional immunity.

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1941 – 50

  • L. 79-291, approved December 29, 1945 (HR 4489)
    • Adds FUTA Section 3306(c) (16), an exclusion from coverage for service performed for an international organization.
  • L. 79-719, approved August 10, 1946
    • Extends coverage to maritime service. Provides that a State can cover the crew of an American vessel if the operating office is within the State.
    • Seamen formerly employed by the U.S. War Shipping Administration were eligible for Reconversion Unemployment Benefits for Seaman paid under the law of the State in which they filed the claim. This program ends on June 30, 1950.
    • Adds FUTA Section 3306(c)(17), providing for exclusion from coverage of services performed by a fisherman except for commercial halibut or salmon fishing or on a boat of more than 10 net tons.
  • L. 80-492, approved April 20, 1948
    • Amends FUTA Section 3306(c)(15) by adding an exclusion from coverage for services performed by a news agent.
  • L. 80-642, approved June 14, 1948 (H.J. Res. 296)
    • Amends FUTA, following a Supreme Court decision, to limit the term "employee" to an employee under the common law rule of "master-servant" relationship, retroactive to 1939.
    • Federal coverage was withdrawn from some 500,000 persons, including outside salesmen.
  • L. 81-734, approved August 28, 1950 (HR 6000)
    • Social Security Act Amendments of 1950
    • Amends FUTA to redefine exclusion for casual labor not related to the employer’s usual course of business.

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1951 – 60

  • L. 83-196, approved August 5, 1953 (HR 5303)
    • Amends FUTA to permit States to cover services performed by general agents of the Secretary of Commerce in connection with American vessels owned or chartered to the U.S. under the following conditions:
      • Those general agents are designated instrumentalities of the U.S.
      • The State may require contributions from persons having employees on such vessels and require the Secretary of Commerce's agents to make contributions for both unemployment compensation and temporary disability insurance.
      • Each general agent as described above is a legal entity in his capacity as an employer on his own account.
      • Adds a definition of "general agents" as applied to vessels operated by such agents of the Department of Commerce.
    • L. 83-591, approved August 16, 1954
      • Amends FUTA to include organizations that test for public safety in the list of nonprofit organizations for which services are excludable.
    • L. 83-767, approved September 1, 1954 (HR 9707)
      • Extends coverage to Federal civilian employees employed after December 31, 1954, subject to benefit provisions of State laws, under Title XV of the Social Security Act, the Unemployment Compensation for Federal Employees (UCFE) program.
      • Extends coverage, effective January 1, 1956, to employers of four or more workers in 20 weeks in a calendar year.
    • L. 85-848, approved August 28, 1958 (HR 11630)
      • Ex-servicemen's Unemployment Compensation Act of 1958 (UCX)
      • Establishes a permanent program to provide benefits for veterans under the law of the State in which a claim is filed to coincide with the end of special coverage for Korean veterans.
    • L. 86-778, approved September 13, 1960 (HR 12580)
      • Social Security Amendments of 1960
      • Effective January 1, 1961, coverage under the UCFE program is extended to certain instrumentalities that were neither wholly nor partially covered by FUTA, such as Federal Reserve banks, land banks, and credit unions.
      • Effective January 1, 1961, Puerto Rico is brought into the Federal-State system.
      • Coverage is extended to employees on American aircraft working outside the United States; employees of nonprofit institutions not exempt from income tax; and various employees of certain income tax-exempt organizations (fraternal beneficiary society, certain agricultural organizations, volunteer beneficiary association). Employees providing service for a 501(c)(3) organization or an organization that provides religious, charitable, or educational services are exempt from coverage (previously employees of certain nonprofit organizations organized and operated exclusively for scientific, testing for public safety, educational purposes, or for the prevention of cruelty to children and animals).

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1961 – 70

  • L. 87-256, approved September 21, 1961 (HR 8666)
    • Mutual Educational and Cultural Exchange Act of 1961
    • Amends FUTA Section 3306(c)(18) by providing an exclusion for services performed by a nonresident alien while temporarily in the U.S. as a nonimmigrant.
  • L. 91-373, approved August 10, 1970 (HR 14705)
    • Employment Security Amendments of 1970
    • Extends coverage, effective January 1, 1972, to:
      • Employers who had one or more employees performing service in 20 weeks in a calendar year or a quarterly payroll of $1500;
      • Nonprofit organizations of four or more employees (excluding churches, religious organizations, and primary or secondary schools), State hospitals and State institutions of higher education (by requiring States to provide mandatory coverage);
      • Outside salesman and agents and commission drivers;
      • Certain categories of agricultural processing workers; and
      • S. citizens working for American firms outside the U.S. (who are required to file their benefit claims in person within the U.S.).
      • College faculty and other professional workers in colleges are covered but are not eligible for benefits (based on college employment) in summers or between terms if they have a contract to resume such work. States can exclude, from otherwise required coverage, students’ spouses employed by schools under certain conditions, and workers in hospitals in which they are patients.

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1971 – 80

  • L. 94-566, approved October 20, 1976 (HR 10210)
    • The Unemployment Compensation Amendments of 1976
    • Effective January 1, 1978, extends coverage to:
      • Agricultural labor for employers with 10 or more workers in 20 weeks or who paid $20,000 or more in cash wages in any calendar quarter.
      • Household workers of employers who paid $1,000 or more in any calendar quarter for such services.
      • State and local governments with certain minor exceptions.
      • Employees of nonprofit elementary and secondary schools.
    • The Virgin Islands is permitted to become part of the Federal-State unemployment insurance system.

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1981 – 90

  • L. 97-34, approved August 13, 1981 (HR 4242)
    • Economic Recovery Tax Act of 1981
    • Adds to exclusions from FUTA coverage services excluded from Federal Insurance Contributions Act (FICA) under section 3121(b)(2) of the Internal Revenue Code (services performed by an individual engaged in fishing on boats which normally have crews of fewer than 10 individuals, and for which any remuneration is provided as a share of the catch or the proceeds of the catch). (Effective for calendar year 1981.)
  • L. 97-248, approved September 3, 1982 (HR 4961)
    • Tax Equity and Fiscal Responsibility Act of 1982
    • Excludes from FUTA (and FICA) coverage of certain direct sellers and real estate sellers who are licensed direct sellers of real estate or who execute an agreement with an employer in which substantially all remuneration is based on sales or output (commission).
  • L. 99-272, approved April 7, 1986 (HR 3128)
    • Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)
    • Continues exclusions from coverage as provided below:
      • Permanent exemption from FUTA for wages paid to summer camp counselors who are full-time students, effective for wages paid after September 19, 1985.
      • Permanent exemption from FUTA for wages paid to certain fishing boat crew members (applicable only if remuneration depends on the boat's catch and the crew normally consists of fewer than 10 members), effective for wages paid after December 31, 1980.
    • L. 99-514, approved October 22, 1986 (HR 3838)
      • Tax Reform Act of 1986
        • For purposes of services performed for certain tribal governments:
          • Excludes from FUTA service performed in the employ of a qualified Indian tribal government if it was service which is performed:
            • before, on, or after date of enactment (October 22, 1986), but before January 1, 1988, and
            • during a period in which the Indian tribal government is not covered by a State UI program,
          • and with respect to which the FUTA tax has not been paid.
          • "Qualified Indian tribal government" defined as an Indian tribal government the service for which is not covered by a State UI program on June 11, 1986.

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1991 – 2000

  • L. 104-188, approved August 20, 1996 (HR 3448)
    • Small Business Job Protection Act of 1996
    • Amends Chapter 25 of the Internal Revenue Code of 1986, relating to employment taxes, to expand the definition of "direct seller" to include newspaper carriers and distributors, effectively making these individuals independent contractors and thus ineligible for any benefits arising out of status as an employee. This provision is effective January 1, 1996.
    • Amends section 3121 (b)(20) of FICA and, by reference, FUTA, to clarify the employment tax status of certain fishermen. The law permits exclusion from coverage of services performed by these individuals when a list of criteria are met, among them that the size of the crew is normally fewer than 10 individuals. The change specifies that the exclusion applies if the average size of the crew on trips made during the preceding 4 calendar quarters was fewer than 10 individuals. In addition, the exemption applies if the crew member receives certain cash payments. The cash payment cannot exceed $100 per trip, is contingent on a minimum catch, and is paid solely for additional duties (e.g., as mate, engineer, or cook) for which additional cash remuneration is customary. These amendments apply to remuneration paid after December 31, 1994. In addition, the amendments apply to remuneration paid after December 31, 1984, and before January 1, 1995, unless the payer treated such remuneration when paid as subject to FICA taxes.
  • L. 104-193, approved August 22, 1996 (HR 3734)
    • Personal Responsibility and Work Opportunity Reconciliation Act of 1996
    • The term "employee" is defined within the meaning of Chapter 24 of the IRC of 1986, and "employer" is defined within the meaning of section 3401(d) of the IRC and includes any governmental entity and labor organization as defined in the National Labor Relations Act.
  • L. 105-33, approved August 5, 1997 (HR 2015)
    • Balanced Budget Act of 1997
    • Amends FUTA to permit States to exclude from coverage services performed as an election official or election worker if the amount of remuneration received by the individual during the calendar year for services as an election official or election worker is less than $1,000. Coverage was previously required. Effective for calendar years beginning after date of enactment.
    • Amends FUTA to exclude from coverage services performed by persons committed to a penal institution. Effective for services performed after January 1, 1994.
    • Amends FUTA to permit States to exclude from coverage services performed for an elementary or secondary school which is operated primarily for religious purposes, which is described in section 502(c)(3), and which is exempt from tax under section 501(a). Coverage was previously required. Effective for services performed after date of enactment.
  • L. 106-554, approved December 21, 2000 (HR 4577, HR 5662)
    • Consolidated Appropriations Act, 2001
    • Amends FUTA to treat Indian tribes (governmental entities and any subdivision, subsidiary, or business enterprise wholly owned by the tribe) similar to State and local governments, meaning that:
      • Services performed in the employ of tribes generally are no longer subject to the FUTA tax.
      • As a condition of participation in the UI program:
        • Services performed in the employ of tribes, are with specified exceptions, required to be covered under State UI law. Previously, coverage was at the option of the State.
        • Tribes must be offered the reimbursement option. Previously, States were prohibited from offering the reimbursement option to tribes.
      • Extended benefit payments based on services performed in the employ of tribes no longer qualify for Federal sharing.
    • Provides that if a Tribe fails to make required payments to the State’s unemployment fund or payments of penalty or interest, then the tribe will become liable for the FUTA tax and the State may remove tribal services from State UI coverage.
    • Includes a transition provision which waives past due FUTA taxes for Tribes who reimburse the State for benefits paid for service attributable to the Tribe.
    • Effective upon enactment

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2001 – 19

  • No changes made to the federal requirement of employee coverage.

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California Assembly Bill No. 5

  • California has passed a bill concerning the state’s coverage of Unemployment Insurance that will come into effect on January 1, 2020. This bill will include a three part test to determine if a worker will be considered an independent contractor or an employee that will be covered by unemployment insurance. The test considers a worker an employee unless all of these conditions are met:
    • (A) The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
    • (B) The person performs work that is outside the usual course of the hiring entity’s business.
    • (C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
  • This bill will change a significant amount of workers from ‘independent contractor’ status to ‘employee’ status.  The bill defines certain occupations that will be excluded from this law and instead follow previous standards. These occupations include licensed insurance agents, certain licensed health care professionals, registered securities broker-dealers or investment advisers, direct sales salespersons, real estate licensees, commercial fishermen, workers providing licensed barber or cosmetology services, and others performing work under a contract for professional services, with another business entity, or pursuant to a subcontract in the construction industry.
  • For more information about California Assembly Bill No. 5, go to

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Last Modified Date: March 6, 2020