Unemployment insurance is a joint federal-state program that provides temporary benefit payments to employees who are out of work through no fault of their own. Thanks to the coronavirus pandemic, finding another job is no small feat. In recognition of these tough economic times, the federal government has passed a law that temporarily increases unemployment benefits and extends them for up to 13 additional weeks.
Unemployment benefits are intended to partially replace lost wages, so the precise amount you receive will depend on what you used to earn. States use different formulas to calculate benefit payments, but all states take prior earnings into account in some way. Some states consider the employee's prior annual earnings; others look at the employee's earnings during the highest paid quarter or two quarters of the base period.
All states also set an upper limit on the total weekly benefit amount. A common formula is to pay half of what the employee used to earn, up to a cap that's tied to the average earnings in that state. This means that employees with higher wages may receive a larger overall benefits check, but a smaller percentage of what they used to earn. The maximum amount an employee can receive each week varies widely from state to state.
Some states provide an additional benefit amount to employees with dependents. These amounts tend to be small; most states that provide this benefit offer $25 or less per dependent per week in additional benefits.
Unemployment benefits are taxable. You may elect to have up to 10% of your benefit amount withheld to pay federal income taxes.
If you earn other income while receiving unemployment, that may reduce the amount of benefits available to you. Of course, if you find a new job, you will no longer be eligible for unemployment. But if, for example, you pick up temporary work for a day or two while you are otherwise unemployed, you must report your earnings to the state unemployment agency, which will determine whether your unemployment benefits should be reduced to reflect those earnings.
If you are found eligible for unemployment benefits, the notice you receive from the state unemployment insurance department may indicate how much you can expect to receive per week.
To learn more about your state's benefit amounts, contact your state's unemployment department. You can find links and contact information for every state at the Career One Stop site, sponsored by the federal Department of Labor's Employment and Training Administration.
In a normal economic climate, most states offer unemployment benefits for up to 26 weeks, or half a year, although a handful of states now offer benefits for fewer weeks. In these anything-but-normal times, however, the total period for which a former employee can receive benefits has been extended by an additional 13 weeks, up to a total of 39 weeks.
If you need help filing an application for unemployment benefits or appealing a denial, contact a knowledgeable employment lawyer right away to discuss your options.