Nearly 18 million Americans are likely to be jobless this year. For many of them, unemployment insurance (UI) will be a financial lifeline while they hunt for work. The good news is that this year’s American Recovery and Reinvestment Act has provisions that boost the compensation that laid-off workers collect.
Here’s what you need to know now about unemployment benefits…
Generally, states aim to replace half of your prelayoff wages up to a maximum level set by individual states. Currently, Mississippi provides the lowest maximum weekly benefit of $230, while Massachusetts has the highest maximum of $628 per week. In addition, all UI recipients this year get an extra, federally funded $25 per week under the recovery act.
Usually, state unemployment benefits last up to 26 weeks. However, the federal Emergency Unemployment Compensation program currently provides an additional 33 weeks of extended benefits to people in the 35 states with the highest unemployment or 20 additional weeks in the other states. Thus, those in a high-unemployment state — whose jobless rate averaged at least 6% over a three-month period — could collect as much as 59 weeks of UI benefits. And although this program runs out at year’s end, it is likely to be extended by Congress.
In addition to these extensions, another 13 or 20 weeks of benefits now are available under the Extended Benefits program in about two dozen states. The number of states probably will increase. Your state agency’s Web site will tell you how many weeks of extensions are available in your state.
The recovery act suspended federal income tax on the first $2,400 in unemployment benefits paid in 2009. Of the 41 states that impose personal income taxes, 35 base them on the federal tax return, so in those states, you would not pay state tax on the first $2,400 in unemployment benefits this year. Some states have no income tax, and others have special rules about taxing unemployment benefits.
Although UI is meant to help those who involuntarily lose their jobs anywhere in the US, each state has its own rules. In addition to those laid off for economic reasons, some individuals who have been fired or who quit can receive unemployment benefits depending on where they live. If you are out of work for any reason other than a layoff, don’t assume that you don’t qualify. Instead, file a claim and review your state unemployment agency’s decision. If you are turned down, file an appeal.
All states recognize that there can be valid job-related reasons for quitting.
Examples: A big cut in pay and/or work hours… material change in job duties or working conditions… or sexual harassment. In some states, you also may qualify for unemployment payments if you quit a job for a wide range of “compelling” personal reasons. The most lenient of these states include Alaska, Arizona, California, Pennsylvania and Rhode Island. Most other states either don’t accept personal reasons or put varying degrees of restrictions on what qualifies as a “compelling” personal reason.
Common examples of valid personal reasons: To care for an ailing relative… to escape domestic violence… to move with a spouse who is transferred within a company. (In some states, you qualify even if you move because your spouse gets a job with a different employer.)
Most states use a standard of “misconduct” to decide whether to pay benefits to those who have been fired for noneconomic reasons. Generally, those who are fired for “poor performance” do not lose benefits. All states try to decide whether the reasons for a discharge show “willful” misconduct or “reckless” conduct on the employee’s part, and in those cases, benefits often are denied. On the other hand, when the employee is fired because he/she simply couldn’t perform up to the employer’s expectations, benefits are paid. And in most states, being fired for missing a few days of work for valid reasons is not grounds for denying benefits, especially if the employee called in and can document the reasons for missing work.
Part-time workers qualify as long as they earned (over a 52-week period) the minimum required amount set by the state, which tends to be between $400 and $4,000. Various states have different job-search requirements for UI recipients to remain eligible. In some states, recipients can look for just part-time work, while in others, they must look for full-time work.
Contact your state’s UI agency. You can file your initial claim either by phone or, in many states, through the agency’s Web site.
Because of the large number of claims during this recession, most states are encouraging workers to file on the Internet whenever possible. Filing information for every state is found on the US Department of Labor’s site at www.servicelocator.org/OWSLinks.asp.
Look for work, and be prepared to document your efforts. Report any earnings, even if you have temporary work. Each state uses its own formula for adjusting your benefits according to how much money you earn while collecting benefits.
All states provide written notices when they grant or deny benefits. The notice will state how many days you have to file an appeal. Appeals must be in writing and filed as instructed on the notice.
What to do: Always open your mail from the agency immediately. Read the entire decision. Allow sufficient time for delivery if you are mailing your appeal. Clearly express that you are disagreeing with the unfavorable decision and include your name and identifying information, but do not feel that you must cover everything. Save that for the hearing.
Important: File benefit claims while your appeal is pending, or you will not get paid for those weeks even if you win your appeal.
The most important stage of appeal is your hearing before an administrative law judge or hearing officer. You will get prior written notice of the date, time and place. Many states conduct hearings by phone.
Take the time to review the notice. Think about the issues that the notice says will be considered at the hearing. Speak clearly, and stay focused on the issues at hand. For example, in a discharge case, the issue is not whether your former employer should have fired you. The issue is whether the reason is valid for disqualifying you from benefits.
