How Does Unemployment Work? – WSJ

In brief Unemployment insurance allows you to temporarily receive a portion of your wages as a cash benefit while you search for a new job. Each state’s eligibility requirements vary. Typically, you must meet certain prior work and wage requirements and must be unemployed through no fault of your own.  […]

In brief
  • Unemployment insurance allows you to temporarily receive a portion of your wages as a cash benefit while you search for a new job.
  • Each state’s eligibility requirements vary. Typically, you must meet certain prior work and wage requirements and must be unemployed through no fault of your own. 
  • Unemployment is typically subject to federal income taxes and can change based on whether you get a part-time or temp job. 

Millions of Americans have found themselves out of work during the coronavirus pandemic. If you are struggling to find work, you could look into whether you are eligible for unemployment insurance, which can provide you with extra money while you search for a job.  

What is unemployment insurance?

The Federal-State Unemployment Insurance Program, as it is known, was created in 1935 during the Great Depression. Those who are eligible may temporarily receive a portion of their wages as a cash benefit while searching for work. The exact entitlement varies by state. Find out more information through your state’s unemployment agency. 

Who is eligible for unemployment insurance?

Each state has its own eligibility guidelines, but according to the U.S. Department of Labor, you will likely qualify if:

  1. You are unemployed through “no fault of your own.” This means you are out of work for a reason out of your control, such as a layoff. If you voluntarily quit your job, you are unlikely to be eligible, although some states may consider your case if you resigned with “good cause,” such as due to unsafe working conditions. You might qualify if you were fired, so long as you weren’t terminated for “gross misconduct,” which usually includes illegal or unethical behavior such as theft or harassment. Contract workers aren’t typically eligible to apply for unemployment benefits. They can receive relief under the so-called Cares Act, which includes these workers, as well as people seeking part-time work and those who would typically be considered ineligible because they don’t have sufficient work history. 
  2. You meet the work and wage requirements in your state. When determining eligibility, most states require that applicants have worked a certain amount of time in a position or received a minimum amount of earnings from their previous employer to receive benefits. While some states require applicants to have earned a minimum of $1,000 in the first four of the past five completed calendar quarters, others require a minimum of $5,000 over the same period, according to a working paper from the W.E. Upjohn Institute for Employment Research.
  3. You are willing to work and actively looking for a job. This means that, should you be offered a suitable job and you refuse it, your unemployment benefits could be terminated. Each state has its own definition of what is considered suitable, but, generally, this means a position that is similar to work you have previously done, and which is in line with your education level and experience. Some states also require you to submit proof that you are searching and applying for jobs to receive benefits. Other states, such as Washington, offer exemptions to that requirement if you are on a training program to develop skills that will help you find work.
How can I apply for unemployment benefits?
  1. Ask your former employer for help. Many people think of their employer’s human-resources department as only being available to them while they are on the payroll, but it could also assist you after a layoff, says Tyrone Ross Jr., a financial adviser and chief executive of digital investment platform Onramp Invest. “If they have some steps for you to take, it might make it easier,” he says. 
  2. Visit the Labor Department’s website CareerOneStop. Here, you can find more information about eligibility requirements in your state. Generally, you should file your claim with the state where you worked, according to the Labor Department. If you have since moved away or if you worked in multiple states, the unemployment-insurance agency where you currently live can provide information about how to file your claim with other states.
  3. Contact your state’s unemployment-insurance program as soon as possible after becoming unemployed. Depending on the state, claims may be filed online, by phone or in person. Some states require you to be unemployed for a certain period before you may begin collecting benefits. The waiting period is often a week. 
  4. Have your dates of employment ready. When you file your claim, you will be asked to provide your dates of employment and the employer’s address. Make sure you provide complete and accurate information. You will likely need to provide pay stubs or other proof of income. 
  5. Follow up. Unemployment insurance agencies have been processing an increased number of claims due to the coronavirus pandemic, leading to delays in some cases. Don’t hesitate to call and follow up if you haven’t heard back about your claim. You might have to call multiple times before you hear back. “Sometimes, because a lot of these agencies are overwhelmed, especially during Covid, you might not be able to get through on the phone,” says Luis Rosa, a certified financial planner and founder of Build A Better Financial Future LLC.
  6. Consider appealing if your claim is denied. If you receive a denial, you typically have between 10 and 30 days to request an appeal.
What happens if my unemployment application is approved? 
  1. You can receive benefits for a set number of weeks. Before the pandemic, the standard maximum was 26 weeks, but the limit varies by state. Most states will replace about half of your prior weekly earnings, up to a threshold. In February 2020, average weekly benefits were about $387 nationwide, according to the Center on Budget and Policy Priorities.
  2. You are required to file regular claims. To keep receiving benefits, you will likely need to file weekly or biweekly claims that describe what jobs you have found in your search, any job offers you have received, times you have turned down work, why you turned down the work and any earnings you have received from part-time work. Before the coronavirus pandemic, recipients in many states were required to attend in-person meetings to update the unemployment agency on their job hunt and some were obliged to attend training sessions. Some states have changed their regular protocol due to the pandemic.
  3. Keep taxes in mind. Unemployment benefits are typically subject to federal income taxes, but some states have exempted the benefits due to the coronavirus pandemic. If your state hasn’t done so, you could consider filling out form W-V4. The “v” stands for voluntary. This will withhold taxes from your unemployment benefits checks. Otherwise, you will likely need to send quarterly estimated tax payments to the Internal Revenue Service. You could also pay the amount in full when it is due on your tax returns, but that could create a liability if you were supposed to withhold the tax or send quarterly estimates throughout the year.
  4. You don’t need to use your benefits consecutively. If, for example, you find a six-week contract position in which you earn too much to qualify for benefits, you can still access the insurance when your contract ends.
Does getting a part-time or temporary job affect unemployment? 

Yes. But if you are earning less in part-time work than you are receiving unemployment insurance, then you are still eligible for the unemployment benefits. Each state has a different method for calculating your unemployment benefit after factoring in the amount you earn from part-time work. Because of this, some people may need to consider whether taking on additional employment will significantly affect their unemployment-insurance benefits, says Mr. Rosa. 

Is unemployment insurance my only option?  

Unemployment benefits are meant to provide temporary relief as you figure out your next step. But claiming them isn’t the only option available to you. If you are struggling with your finances, you can take steps to cut back on your expenses, says Mr. Rosa. “Ask yourself ‘How can I get more money, and how can I reduce my expenses?’ And one of those ways is being proactive and calling each and every one of your creditors,” he says. Many companies are helping out their customers if you call and say you have been affected by the Covid-19 pandemic, he says. Federal student loans have been temporarily deferred, but Mr. Rosa also suggests calling your private lender to ask what options are available. If you are a homeowner, you can also contact your mortgage company to ask about getting forbearance. 

If you are facing food or housing insecurity, you could also look into government programs meant to help people navigate tough times, such as the Supplemental Nutrition Assistance Program, Temporary Assistance for Needy Families or WIC, which is the Special Supplemental Nutrition Program for Women, Infants and Children. These systems, like many assistance programs, have been under strain during the coronavirus pandemic, but are still worth contacting, says Mr. Ross Jr. “Yes, the government does provide some type of safety net for people, but the unfortunate thing is, we’re not taught that, and financial professionals aren’t taught to direct people toward that, either,” he says “Unfortunately, you got to learn these things because they are going to help you take care of your family until you secure that new job.” 

Resources
  • A state-by-state list of unemployment-insurance contacts from the Department of Labor.
  • CareerOneStop can provide more information about unemployment benefits in your state.
What to read next
Further reading

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Source Article

Next Post

Atlanta Falcons at Los Angeles Chargers odds, picks and prediction

Sat Dec 12 , 2020
The Los Angeles Chargers (3-9) look to move past an ugly 45-0 loss in Week 13 when they host the Atlanta Falcons (4-8) Sunday at SoFi Stadium. The Week 14 kickoff is at 4:25 p.m. ET. Below, we preview the Falcons-Chargers betting odds and lines and make our NFL picks and predictions. […]