When can unemployment benefits be collected?
Unemployment benefits may be collected by employees who have earned enough to qualify for benefits under their state rules. Although special regulations may be put into place during times of broad economic hardship (see the section on special rules pertaining to the COVID-19 crisis, below), typically only those who have been terminated through no fault of their own may collect.
Who qualifies for unemployment benefits?
Every state has modestly different guidelines; but in general, employees who are working for a company that lays them off from employment or substantially cuts their hours are eligible to collect benefits. Employees who are fired (i.e., for cause) typically are not eligible to collect UI benefits.
Under recently enacted federal legislation, eligibility requirements for UI benefits have expanded to also include independent contractors, freelancers, and self-employed workers whose income was directly impacted by COVID-19.
How are unemployment benefits claimed?
Anyone who is eligible to collect benefits may typically do so through their individual state’s division of labor or employment website. Some states do require individuals who are filing a claim to visit the office, so it is important to understand what the specific state requirements are when filing a claim.
Where do unemployment benefit funds come from?
Other than Arkansas, New Jersey, and Pennsylvania, employers pay into the unemployment benefits system by paying a tax. This tax is based on several factors including the number of employees and the number of claims that former employees of the firm have filed for past layoffs. These taxes are paid at both the state and federal level.
State unemployment insurance rates vary for employers based on their history. The more employee claims that an employer has had to pay out, the higher the tax rate. The higher tax rate offers employers an incentive for avoiding laying off workers and cutting positions, since avoiding these actions will keep their unemployment insurance rates lower.
How are unemployment benefits calculated?
Each state uses slightly different calculations. However, the basic calculation used to determine benefits are as follows:
- Determine base period. In general, this period is determined to be the first four of the last five quarters of the calendar year before you applied for benefits.
- Highest weekly pay during base period. Usually calculated using the highest quarter of earnings in the base period.
- Weekly benefit amount determined. Most states will pay half of your highest weekly pay during the base period, up to a maximum amount (based on the average earnings in the state).
If you have questions about unemployment payments in your state, ask a lawyer.
Is there a maximum amount of unemployment benefits which can be collected?
Yes, although weekly benefits are much higher than usual (for a while, at least), thanks to UI increases implemented as part of the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act. Individuals collecting unemployment benefits will receive an extra $600 per week on top of state benefits (which average $385 per week).
Federal stimulus aside, the maximum amount of UI benefits that can be collected is determined at the state level. States calculate your weekly UI benefit amount by looking at your earnings in the past few quarters before becoming unemployed, typically paying half of your regular wages up to a certain limit. In California, for example, the weekly limit for UI benefits is $450 (which is taxable).
Some states may also offer additional benefits for laid off workers who have dependent children. A local lawyer can help you understand what other benefits may be available to you and your family.
How long can unemployment benefits be collected?
In most cases, unemployment benefits can be collected for a period of up to 26 weeks (or about one-half a year). Once the 26-week period is exhausted, many states allow an employee to continue to collect benefits by requesting an extension. However, federal law addressing the COVID-19 pandemic provides a 13-week extension for those who have exhausted their regular claim for UI benefits before the end of 2020.
Individual states are responsible for administering the program even though the funding is partially borne by a federal tax liability to the employer, so some states have slightly shorter benefits periods. However, it is also important to note that in difficult economic times, periods of high unemployment, and at other times, the state may choose to extend its period of eligibility.
How long does it take to get unemployment benefits?
Generally, it takes a couple of weeks to get an unemployment check. This time period may be longer or shorter depending on numerous factors, including:
- When an employer denies the person was laid off
- When there is a dispute over whether an employee left voluntarily or was fired
- When there are periods of heavy claims
Once the claim has been approved and the first payment is received, unemployment benefits are then paid weekly after a one-week waiting period where no benefits are paid. However, many states (including California, Texas, and New York) have temporarily waived this requirement and will reimburse applicants beginning with the first week claimed. Some states also have waived the job search requirement for benefits during the COVID-19 crisis.
What other requirements are there when someone is collecting unemployment benefits?
The person collecting unemployment benefits usually must be actively seeking other opportunities, however many states have issued temporary waivers due to COVID-19. Typically, the documentation of this process involves keeping track of any interviews, applications, or other employment-related activities and reporting them on a weekly basis in order to continue eligibility. Should a person who’s collecting UI benefits refuse a job offer, they typically must advise the unemployment office of the reason for the refusal.
Anyone who is collecting unemployment benefits should also be aware that it’s considered taxable income. Many people opt to have the taxes withheld from their benefits to avoid having a surprise tax bill to deal with. During the time when an employee is collecting unemployment, they also may be eligible for other subsidies, including SNAP benefits (formerly food stamps). An employee may also be eligible for extended health care benefits using COBRA.
Are there special rules for unemployment during the COVID-19 crisis?
There are millions of employees who have had their hours cut drastically, been forced out of their jobs temporarily (i.e., furloughed), or even laid off while the country is fighting COVID-19. Individual states are being offered assistance from the federal government in order to expand unemployment benefits. However, state UI responses to the crisis may vary.
The main changes in unemployment benefits at the federal level, as part of the CARES Act, include:
- An extra $600 in weekly benefits, in addition to regular state benefit amounts
- Additional 13 weeks of UI coverage once state UI benefits are exhausted (if prior to the end of 2020)
- Expanded eligibility, which includes independent contractors, “gig economy” workers, and other self-employed workers, for up to 39 weeks of benefits
A local employment lawyer can help you understand the temporary measures enacted in your state.
Get additional help with your unemployment questions
These are uncertain times for everyone, but losing your job only adds to the confusion. While the main goal right now should be maintaining your health (and the health of your loved ones), you may be facing a financial hardship as the global economy slows. If you’ve been laid off, furloughed, or facing hardship as a freelancer or contractor, unemployment insurance may provide relief. If you need additional legal guidance, visit the Coronavirus Legal Center to get your questions answered for free or find out what other relief you may be eligible for.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.