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How Does Unemployment Work? Here Are the Most Important Things to Know
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Losing your job can be upsetting and stressful. What do you do now? In many cases, depending on how you lost your job, you may be eligible to receive unemployment benefits. Receiving these benefits can relieve some of the financial burden while you search for a new job.

But how does unemployment work?

When your employment ends, you may be entitled to collect unemployment, a percentage of your wages, through a joint state-federal program called Unemployment Insurance (UI). UI allows you to receive temporary financial assistance while you actively seek out new employment. Your eligibility to receive UI depends on how you lost your job, whether you are employed or work part-time or full-time currently, and the rules of your state unemployment office.

In most states, workers may file for unemployment online as soon as they are terminated from their employer. While you may be able to mail in your claim, visiting your state’s Unemployment Benefits website will allow you to complete the process more quickly; not only can you file your claim online, but you may find answers to many of your questions about your unemployment claim, benefits, and compensation as well. Try to do this as soon as possible (within a week of the end of your employment), because there is often a delay between submitting your initial claim and your first paycheck.

Determining eligibility

States administer individual unemployment insurance programs while following the same federal guidelines. In general, workers are eligible to receive the benefits if they become unemployed through no fault of their own. Usually, that means your employer eliminated your position, your employer fired you because you were physically unable to meet the requirements of the job, or your temporary employment ended. There are several other reasons for employment termination that could make you eligible for unemployment benefits; if you’re in doubt about your eligibility, visit your state’s website.

Your state sets requirements for wages earned over a base period—an established period of time. In most states, the base period is roughly 52 weeks (four calendar quarters) prior to your claim filing. Most states establish a minimum income for eligibility.

You must also be willing and able to work. For instance, New York’s unemployment insurance website states that workers must be “ready, willing, and able to work, and actively looking for work during each week in which you are claiming benefits.” Other states have similar stipulations. That means that if you are offered suitable employment and refuse the offer, your unemployment benefit may be terminated, depending on your state’s rules. States may also require you to submit proof that you are making “job contacts,” meaning you’re conducting a work search, submitting job applications, or using another method of seeking employment.

If your initial claim is denied, you may appeal. Follow the guidelines outlined by your state’s Department of Labor to appeal a denied claim. Depending on the circumstances, there may be a hearing to review your appeal.

Government workers

Some, but not all, government workers are eligible to collect unemployment if they lose their jobs. Whether or not they are able to do so depends on the nature of their positions. New York’s Department of Labor website, for example, states that government employees who held “a major nontenured policymaking or advisory position” are not eligible to collect UI benefits. If you are a former government worker and aren’t sure if you qualify, visit your state’s Department of Labor website.

Teachers and school workers

Like most other workers, teachers and other school workers may be eligible for unemployment benefits if they lose their employment through no fault of their own. Specific circumstances may include:

• Firing due to an inability to meet the employer’s performance or production standards
• Layoffs
• Contracts expired
• Furloughs
• Reductions in force (RIF)

However, in most states, teachers and other school workers may not receive unemployment during breaks in the school year or time between semesters or terms, assuming they have a contract for a similar job in the next school year or term or there is reasonable assurance of a similar job in the next school year or term, or after the break.

How to file for unemployment

Visit your state’s unemployment insurance website to file a claim. In most states, you will need the following materials:
• Your Social Security number
• Your driver license or Motor Vehicle ID card number
• Your complete mailing address and zip code
• A phone number where we can reach you from 8 am-5 pm, Monday–Friday
• Your Alien Registration card number (if you are not a U.S. Citizen and have a card)
• Names and addresses of all your employers for the last 18 months, including those in other states
• Employer Registration number or Federal Employer Identification Number (FEIN) of your most recent employer (FEIN is on your W-2 forms)
• Your copies of forms SF8 and SF50, if you were a federal employee
• Your most recent separation form (DD 214), for military service
(Source: New York State Department of Labor website)

You will likely need your former employer’s information and pay stubs or other proof of income as well.

The process varies a bit depending on your state, but the general outline is the same. Here are the steps for receiving unemployment in New York:

1. Create an account with NY.gov.

2. Login with your credentials and complete an application using the documents above.

3. File your claim weekly for as long as you are unemployed.

How your unemployment benefit is calculated

Your benefit is determined using your base period wages. The actual percentage varies by state. In New York, for example, your weekly benefit rate is 1/26 of the high quarter wages paid to you in your base period. “High quarter” refers to the period when your wages were the highest in the first four of the past five quarters, meaning they were closest to your full-time rate. There is generally a maximum weekly benefit rate as well.

That means that if you received $3,500 during your high quarter, your weekly benefit would be about $385 (10,000/26). The maximum benefit amount for New York is $420.

California, meanwhile, has a similar formula, but the maximum benefit is $450. Additionally, California uses ranges to determine your pay. Consult this chart to find out how much you can expect to earn based on your high-quarter base.

Most states will require you to submit biweekly or weekly claims. You will also need to report any income you receive (from freelance work, part-time jobs, or other sources). Depending on how much income you receive in a given week, your unemployment wages may be decreased and you will receive a partial benefit. Any severance pay you result as a result of your employment termination is separate from unemployment insurance but may affect the amount of money you receive from the benefit. Note that if you receive more income, even through a combination of sources, than the maximum unemployment pay in your state in a given week, you will be ineligible to receive unemployment for that week.

Since you must be actively looking for employment while you receive the benefit, you must report any job offers you receive and decline during the week as well.

Length of unemployment benefits

In most states, you may receive benefits for a maximum of 26 weeks. Keep in mind that your unemployment benefit may end before you receive full-time work or a full-time job; receiving wages from a part-time job or income from other sources may mean that you no longer meet the eligibility requirements for your state's unemployment insurance program.

In periods of high unemployment, however, it may be possible to receive Extended Benefits or additional payment weeks. States may institute Extended Benefits if the state employment rate has exceeded a certain threshold for an extended period of time.

Unemployment benefits are taxed and must be reported on your income tax return. You may choose to have the tax withheld from your payment.

Avoiding scams

Unemployment insurance fraud can take many forms. In cases of identity theft, someone may use your personal information, such as your social security number, to file a claim and ultimately receive your benefits. If you think you might be the victim of identity theft, contact your state’s Unemployment Insurance Fraud hotline.

Scammers may also offer to file unemployment claims on your behalf. If you come across a website offering to collect your information to file your claim or receive phone calls or emails with similar solicitations, do not give them your personal information. No third party may file a claim for you; you, the unemployed worker, must do so yourself through your state unemployment office. Again, if you receive such offers, or think you might be the victim of a scam, contact your state’s Unemployment Insurance Fraud hotline.

Make sure that you aren't unintentionally committing fraud by providing false information to the government, inaccurately reporting your earnings, working under the table, collaborating with employers to file false claims, or earning more than the maximum wages allowed for your state's UI program. Review the rules and eligibility requirements for your state carefully to ensure that you meet them and are accurately reporting your information while you are an unemployed worker and collecting the benefit. The penalty for UI fraud is severe.

For more information

In most states, filing for unemployment benefits is a relatively simple process. Visit your state’s website for more information. Many websites have an FAQ section that should answer most of your questions. You can also contact your state’s Department of Labor for more information.

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