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Unemployment insurance: What it is and how to get it

At a glance:

  • Who is eligible for unemployment insurance?

  • The unemployment insurance claim process

  • Summary of unemployment insurance

Unemployment insurance, or UI, is money paid to people who have lost a job (or sometimes, had their hours cut) through no fault of their own.

UI is temporary income meant to help make ends meet while people look for another job.

The value of unemployment benefits differs among the states because each state unemployment office applies its own formulas and limits when calculating the level of unemployment compensation.

The duration of unemployment benefits also differs among the states.

UI is not available to the self-employed. You must have received a certain amount of recent wage income (as determined by the state). You must also be ready, willing and able to immediately accept work, as well as be actively looking for it.

Who is eligible for unemployment insurance?

An employee whose position is eliminated due to downsizing or who is part of a layoff is generally eligible for unemployment benefits.

That situation is clear-cut. Less clear are situations in which the employee quits or is terminated. There, the particular facts and circumstances involved will determine eligibility.

When an employee quits

If you quit your job, you will be eligible for benefits only if you did so for "good cause." That term is clearly open to interpretation, but it does not include your subjective, personal good reasons for quitting, such as dissatisfaction with your position or the desire for a better chance at career advancement.

In a nutshell, "good cause" requires that you would suffer some type of harm from remaining on the job OR that you be subject to an intolerable work environment. In other words, the "good cause" must have to do with the employment, not your personal life, and the question will be whether any reasonable person in the same job situation would have quit.

Additionally, the state may require you to make all reasonable attempts to keep your job (e.g., request a transfer).

Examples of good cause include situations such as leaving work due to unsafe working conditions, or based on a doctor's medical advice. Alternatively, "intolerable working conditions" include situations such as sexual or racial harassment.

When an employee is terminated

Fired employees can claim unemployment compensation (UC) if they were terminated, for example, because the employer finds them to be unsuited (i.e., not a good fit) for the job for which they were hired.

UC is generally available, too, if the firing was due to minor or unintentional workplace infractions. Note that usually if a person quits because he or she was told by the boss to resign or be fired, most states would consider that a "firing."

People wait in line to enter the Nassau County Mega Job Fair at Nassau Veterans Memorial Coliseum in Uniondale, New York. (Photo: REUTERS/Shannon Stapleton/File Photo)
People wait in line to enter the Nassau County Mega Job Fair at Nassau Veterans Memorial Coliseum in Uniondale, New York. (Photo: REUTERS/Shannon Stapleton/File Photo)

By contrast, UC will not be given in the case of a termination due to "misconduct," which has a fairly narrow definition. Misconduct requires that the employee do something willfully to hurt the employer or the business.

Any form of stealing would clearly be misconduct, as would be workplace drug or alcohol use or the sexual or racial harassment of co-workers. Insubordination, off-work conduct, chronic tardiness or unexcused absences might also constitute misconduct, depending on the particular facts involved.

Poor job performance because of lack of skills, good faith errors in judgment, inefficiency or personal "unlikeability" do not constitute misconduct.

The unemployment insurance claim process

If you are deemed eligible for unemployment benefits, you will probably receive significantly less money than you made while at your job, and the benefits generally last for only about six months. (Depending on your circumstances and state, you may be able to extend your benefits for additional weeks; the availability of this benefit depends on whether Congress extends it.)

For more information or to apply for unemployment insurance, contact your state's labor department or the agency that administers unemployment benefits in your state.

The unemployment insurance (UI) claim process varies by state, but the general sequence of events is similar throughout the country:

How it begins

The process begins with you filing the claim, which in many states can be done online. Contact your state's labor department or equivalent agency that runs the UI program for details.

Be prepared to show that you were employed. Each state has requirements for wages earned or time worked during a period of time referred to as a "base period." You will probably need the name, address, and phone number for each of your employers over the last 18 months or so.

You will need to provide the start and end date for each job. You may find it easiest to do this by retrieving W2 forms from your tax files.

Note that you will be required to file ongoing claims and respond to questions concerning your continued eligibility, including your search for work. Also be prepared to show that your unemployment is not your fault. You might need to provide any written notification of your layoff or termination that you've received.

Your former employer will then be sent notice of your claim and given about a week or two to file a written objection.

The next step: the state

The state's UI program office will make an initial determination of whether you are eligible to get unemployment benefits.

A hearing may be held at the request of either you or the former employer if either of you disagrees with the initial eligibility decision. Disagreement is common; employee misconduct, for example, is often a matter of interpretation. Occasional conduct that your boss dislikes might not be misconduct.

But intentionally engaging in conduct that the entire office finds offensive might indeed be misconduct, especially if it continued after repeated warnings.

The hearing (which is sometimes held via conference phone call) will be before a staff hearing officer. At the hearing, both parties have the chance to present their cases with their own testimony, as well as witnesses and any relevant written records. Each side is entitled to have a lawyer, but this is not required.

The appeal

Every state has a procedure for an administrative appeal by a party unhappy with the hearing officer's decision. A separate person or board of review will re-examine the testimony and documents recorded at the initial hearing. Occasionally, additional evidence can be presented.

Be aware, however, that the hearing officer's ruling is generally upheld.

Finally, either is free to file an appeal in the state court system, but this is unusual and seldom successful.

Courts will defer to the unemployment insurance agency's decision unless the decision is clearly contrary to law or is not supported by substantial evidence.

Daisy Ronco waits in line to apply for a job with Marshalls during a job fair at Dolphin Mall in Miami. (Photo: AP Photo/Lynne Sladky, File)
Daisy Ronco waits in line to apply for a job with Marshalls during a job fair at Dolphin Mall in Miami. (Photo: AP Photo/Lynne Sladky, File)

Here is a website where you can find additional information:

  • US Department of Labor information about state UI benefits

Summary of unemployment insurance

Unemployment insurance is a state-run program that pays temporary income to people who have lost a job through no fault of their own.

Eligibility is clear when an employee's position is eliminated due to downsizing or a layoff, but when the employee quits or is fired, eligibility will depend on the particular facts and circumstances involved.

The unemployment insurance claim process varies by state, but the general sequence of events is similar throughout the country. For more information, contact your state's labor department or equivalent agency.

This content was created in partnership with the Financial Fitness Group, a leading e-learning provider of FINRA compliant financial wellness solutions that help improve financial literacy.

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