How Do Unemployment Benefits Work?

When you lose your job, you can apply for unemployment insurance (UI )benefits. These benefits come from the state unemployment insurance fund, paid for by employers. Eligible workers who lose their jobs due to no fault of their own may qualify for unemployment benefits until they find suitable work.

If you have recently lost your job or are wondering about unemployment benefits, it is crucial to understand how unemployment benefits work. An experienced employment attorney can help you. They can assist you in understanding your rights and guide you through the process of filing your claim.

In this article, we’ll provide an overview of what unemployment insurance benefits are and answer a few frequently asked questions (FAQs) about them.

What Are Unemployment Benefits?

Unemployment benefits, or unemployment insurance benefits (UI benefits), are temporary payments provided to eligible workers who lose their jobs.

State and federal unemployment insurance taxes paid by employers fund unemployment benefits. The Federal Unemployment Tax Act (FUTA) and the State Unemployment Tax Act (SUTA) are the two federal laws that grant this benefit. The benefits are not funded by taxpayer money or from the deductions on employees' paychecks. The federal unemployment tax is 6% on the first $7,000 in annual wages paid for every employee.

Every state administers its own unemployment insurance program and maintains its trust fund through SUTA taxes. State tax rates use an "experience rating system. " This means that the pay rate depends on the number of former employees claiming benefits. To discourage layoffs, the system taxes employers at a higher rate if more workers claim these benefits.

During economic downturns, states with low reserves can borrow from federal unemployment funds. This system ensures that unemployment benefits remain available even during high unemployment rates.

Who Can Claim Unemployment Checks?

Every state has its own guidelines as to who can claim unemployment benefits. But in general, you may qualify for unemployment benefits if you meet the following:

• You lost your job through no fault of your own, such as a layoff or a reduction in the workforce.
• You meet your state's requirements for work and wages earned or the time worked during a "base period." State agencies determine your weekly benefit amount (WBA) by your earnings during the base period.
• You meet additional requirements set by your state laws.

Your eligibility primarily depends on the circumstances of your last job separation. For example,you may have lost your job due to a lack of work, business closure, downsizing, or similar economic reasons.

If you lost your job because of minor infractions or unintentional mistakes, you may still qualify. However, termination for serious misconduct usually disqualifies you.

If you quit voluntarily, you generally won't qualify. However, if you have "good cause" for quitting, state agencies might qualify you for unemployment benefits. We’ll discuss this in more detail below.

Eligibility for unemployment benefits may be subject to work search requirements. Individuals must also actively seek new suitable work to maintain their unemployment eligibility. The conditions of the labor market in your area may also affect your eligibility requirements.

Can Federal Employees Get Unemployment?

As a federal employee, you may be eligible through the Unemployment Compensation for Federal Employees (UCFE) program. Although the federal government operates it, the claim amount and other eligibility requirements are still determined by state regulations. The agency will ask how you lost your job before contacting your former employer for verification.

As a federal employee, your eligibility for unemployment benefits generally follows the same requirements as other workers. However, there are some important distinctions that you should be aware of. The U.S. Department of Labor provides a more detailed discussion about UI benefits for federal employees and contractors.

What Constitutes “Good Cause” to Quit?

You must have a compelling reason to leave your job to qualify as having quit for good cause.

For purposes of collecting unemployment insurance compensation, compelling reasons to leave a job may include:

• Harassment
• Discrimination
• Substantial reduction in hours or pay
• Threats of termination or forced resignation
• Unsafe or hazardous working conditions

Deciding to quit a job because it doesn't offer opportunities for advancement may be a good reason from a professional standpoint. However, most courts will not consider it a compelling reason or “good cause.” Dissatisfaction with the job or your boss is also not considered a compelling reason to quit.

How Much Are Unemployment Benefit Payments?

Most states cover around 40% to 60% of your previous wages, up to the maximum amount of benefits. However, the amount of unemployment benefits varies significantly in every state. Each state also has its own formula for calculating the benefits and maximum weekly amount.

For instance, Mississippi pays weekly unemployment insurance compensation, ranging from $30 to $235. Meanwhile, Massachusetts pays the maximum weekly benefit amount of $1,051 per week.

How Long Do Unemployment Benefits Last?

The standard unemployment benefits in most states last for up to 26 weeks (six months). The number of weeks you can receive unemployment benefits may vary depending on your state laws and when you file your claim.

However, state agencies may offer extended benefits during national emergencies or economic downturns. For example, the federal government authorized extended benefits programs during the COVID-19 pandemic. They significantly lengthened the period when workers could receive benefits.

Are There Additional Benefits I Can Obtain While Unemployed?

Other than the standard unemployment insurance, you may also qualify for additional benefits, such as:

• Federal-State extended benefits (EB): This partnership with the federal government provides up to an additional 13 weeks of benefits when a state experiences high unemployment rates.
• Trade readjustment allowances: Trade readjustment allowances are available for those who lost their jobs because of foreign trade impacts. These include financial support, relocation assistance, job search allowances, and training benefits.
• Disaster unemployment assistance (DUA): This type of assistance is available to those who lost their employment because of major disasters.
• Self-employment assistance: This assistance is available to help unemployed workers start businesses. Workers eligible for self-employment assistance programs also receive self-employment payments weekly.
• Training or retraining programs: States may also provide extended training or retraining programs. You may be eligible for extended benefits while you learn new skills.

How Do I File for Unemployment Benefits?

To receive your UI benefits, you must file your unemployment insurance claim as soon as possible within the state of your employment. Depending on state laws, you may have to file your claim in person, online, or via phone.

Where and When to File

The Department of Labor advises you to file your claim with the state where you worked. You should also apply as soon as possible after you lose your employment. The delay in filing could result in postponed benefit payments.

What You'll Need

When filing your UI claim, you must provide information to verify your identity and employment history. It may include your:

• State-issued identification card, such as your driver’s license
• Social Security number
• Dates of your employment

The state agency will also ask for the reason for your job separation.

What to Expect After Filing

After you submit your application, the state agency will review your claim. The processing time often takes two to three weeks before receiving your first benefits payment.

Legal Problems with Unemployment Benefits

Several legal issues commonly arise with unemployment benefits. When facing these legal matters, it is helpful to seek help from an employment attorney.

Denied Unemployment Insurance Claims

If your state agency denied your unemployment claim, you can appeal. The denial of unemployment benefits often occurs when the employer disputes your separation. You may also face denial if there are questions about your availability for work or your efforts to look for a job.

The appeals process often starts by filing a formal appeal within a deadline. The court may also ask you to attend a hearing where you and your former employer can present evidence and testimony. An experienced employment law attorney can help you navigate this complex legal process. They can help you prepare evidence and testimony and navigate the procedural requirements.

Overpayment of Unemployment Compensation

The state agency could also determine that there are issues with overpayment. An overpayment happens when you receive unemployment benefits even if you are not eligible. You must then pay it back, even if the overpayment was not your fault.

If you receive a notice of overpayment of unemployment benefits, you have several options. You can file a waiver if the overpayment is not your fault or set up a repayment plan. You can also appeal the determination of overpayment.

Unpaid Taxes on Unemployment Income

Most people don't realize that unemployment benefits are subject to income taxes, and you should report them on your tax return. Failure to pay taxes on unemployment benefits can also result in tax penalties and interest.

Unemployment Fraud

Unemployment fraud occurs when someone knowingly collects benefits they're not entitled to. This includes the following:

• Failing to report earnings while collecting benefits
• Providing false information on an application
• Using another person's identity to claim benefits or
• Continuing to collect benefits after returning to full-time work

If you’re accused of unemployment fraud, it’s important to get help from a legal professional.

Get Help with Your Unemployment Benefits

Unemployment assistance can provide important financial support during a difficult transition to work. However, denial of unemployment compensation and other legal complications can threaten this safety. An experienced employment attorney can help protect your rights. They can assist you in filing your claim and appealing rejected claims. They can also help you gather crucial documentation and fight for the benefits you deserve.