Unemployment benefits you need to know

Whether you’re gearing up for a round of layoffs or are working comfortably, it’s good to have an idea of how unemployment benefits work, just in case. If you haven’t been through the process before, there are some misconceptions to clear up. Monster connected with a few experts to help you understand unemployment eligibility and navigate the steps should the day ever come.

Because of the CARES Act recently passed by Congress in response to the coronavirus crisis, major changes have been  made to unemployment assistance, increasing the benefits, and widening eligibility. States will still pay unemployment to those who qualify, but the amount varies by state, as does the amount of time people are allowed to claim it. Workers will receive an additional $600 per week for four months, on top of what their state's program pays. Also, benefits are extended through December 31 for eligible workers. 

How do you know if you can claim unemployment benefits?

You might think that the moment you become jobless that you can start collecting unemployment, but there are lots of exceptions to that rule. “Every state has specific requirements, application processes, and agencies that handle unemployment insurance (UI) claims,” explains Kelly DuFord, founder and managing partner of San Diego, California-based Duford Law. For instance, California offers UI through the Employment Development Department of California, and Texas UI is handled by the Texas Workforce Solutions Commission.

When it comes to unemployment eligibility, generally, all states require that a person was unemployed through no fault of their own to be eligible for UI benefits. In other words, if you quit your job or are fired for some sort of misconduct because you stole merchandise, you’re not going to get unemployment. But again, it depends on the state. In California and Texas, you could still get benefits for if you’re fired for reasons other than misconduct and if there was a good cause for you to quit your job. For instance, if you leave because of a hostile work environment, you may be entitled to unemployment.  

The other big requirements to be aware of include how much you worked. “Employees are eligible if they work at least 20 weeks within the base period and earned at least $168 per week,” says Steven Adler, co-chair of Mandelbaum Barrett P.C’s Labor and Employment Law Practice Group.

Coronavirus update: Self-employed, independent contractors, and gig economy workers are now eligible for benefits via the temporary Pandemic Unemployment Assistance program through the end of this year.

How long do UI benefits last?

This is another area for which the state you live in might dictate the length of UI. “Most UI programs run for around 26 weeks, but some states have shorter time spans,” says Duford. You can check your specific state’s UI website to confirm the length of the benefits. In the past, the government has also extended benefits during times of economic downturns.

Of course, just because you might be entitled to around six months of benefits doesn’t mean it’s automatic. “An employee must be able to demonstrate that they are available to work and have made a good faith effort to locate employment,” says Adler. 

Coronavirus update: New legislation adds 13 weeks of unemployment insurance. People approaching the maximum number of weeks allowed by their state would get an extension. New filers can collect the benefits for the longer period.

How do you apply for unemployment?

Each state has a specific website and organization through which you can manage your unemployment claim. In most cases, you will need to create an account where you can apply for and monitor your UI status, says Duford. “Most states require that you report bi-weekly about your employment search, so make sure to check your website often for notifications,” she adds.

Also worth noting is that employees must apply in the state where they worked. So if you live in Connecticut but work in New York, you apply in New York.

When should you apply?

Once you know you will be leaving your job you should begin the process immediately, says Mary Cavanaugh, vice president, senior consultant, Keystone Associates “There are factors that come into play: state regulations, severance agreements, and the application process itself,” she says. For example, if you have a severance package that pays you for six weeks after you’re terminated, you usually cannot collect unemployment until after the severance period is over, but state law varies.

“Having your questions answered earlier rather than later will allow you not to delay or lose any part of the benefit,” Cavanaugh says. If you’re leaving on good terms, it’s worth having a conversation with your former human resources department, which may be able to help guide you.

Who pays for benefits?

If you’re wondering where unemployment benefits come from, you might think that employees pay into it, but that’s not accurate. Unemployment benefits are funded through unemployment insurance taxes paid by employers, says Cavanaugh.

What is involved once you begin collecting unemployment?

The process does involve some work and effort on your part. During your unemployment period, you will need to show proof that you are actively searching for a new job. You might have to submit weekly reports online or in person that list any job-search-related workshops and seminars you’ve attended and other job-seeking activities. Sometimes you’ll have to meet with a counselor.

One more important note: Picking up side hustles or gigs while you’re unemployed may prevent you from continuing to receive unemployment benefits, or reduce the amount you collect. That’s because UI is designed to offer assistance to those seeking full-time work.

Do you have to pay taxes on unemployment benefits?

“Benefits received are subject to federal income tax and need to be reported on your federal tax return,” says Cavanaugh. As per the IRS, if you received unemployment compensation during the year, you should receive Form 1099-G showing the amount you were paid. That form should be filed and the amount of unemployment compensation will be included in your income. You do have the option to withhold federal taxes from your unemployment checks, but that will reduce the amount of your benefits.

Start your search

In addition to learning what to do should you ever need to file for unemployment, it’s also a good strategy to put your job search into full gear. Could you use some help with that? Join Monster for free today. As a member, you can upload up to five versions of your resume—each tailored to the types of jobs that interest you. Recruiters search Monster every day looking to fill top jobs with qualified candidates, just like you. Additionally, you can get job alerts sent directly to your inbox to cut down on time spent looking through ads. We know being unemployed is stressful, so let Monster take some of the weight off your shoulders while you focus your energy on a fresh start.

This article is not intended as a substitute for professional legal advice. Always seek the advice of an attorney regarding any legal questions you may have. For more information on unemployment insurance benefits, visit the United States Department of Labor website.