How Unemployment Works

Written by Ben Tejes
Updated Nov 13th, 2023
The information provided in this article does not, and is not intended to, constitute legal or financial advice; instead, all information, content, and materials available in this article are for general informational purposes only. 

If you recently lost your job, you might be wondering what unemployment is and how you can get it. While unemployment benefits can be a lifesaving help, they can also be incredibly frustrating to obtain and maintain. This article is going to look at how you can get your unemployment benefits and what you need to do to maintain those benefits

If you would like to talk to someone about your situation, feel free to give our team at Ascend a call! With that, let’s get started!

What are Unemployment Benefits? 

Unemployment insurance (UI) is a government backed subsidy that provides financial assistance for people who are temporarily out of work at no fault of their own. Employers pay a small percentage of Federal Taxes to support the unemployment system. This is called the Federal Unemployment Tax Act. The process of Unemployment in each state varies slightly, but since all the states get funding for the programs from the federal government many of the requirements are the same. This article will discuss what to expect if you find yourself unemployed in , and what to do if you have lots of debt and are unemployed.  

Basically, unemployment benefits are benefits that you should be entitled to once you are no longer working for your employer. The goal of it is to help you with bills until you are able to find secure and profitable employment once again. Normally, your employer would pay into an unemployment account on your behalf. If you are released from that position, you are potentially eligible to draw from the account. 

You can use an unemployment calculator that is based on your state's unemployment policies to help you estimate your weekly benefit amount.

It is important to note that there are some eligibility requirements that you will have to meet in order to qualify for unemployment benefits. Here are some of the requirements. (This is not an exhaustive list, your state will determine eligibility requirements that might differ from this):
  1. You must typically have become unemployed through no fault of your own (meaning you did not quit your job)
  2. Worked for at least a set amount of time determined by your state (usually somewhere between 12-18 months)
  3. Earned above a set amount of wages (again, determined by your state)
  4. You must be actively seeking a new form of employment each week that you receive unemployment benefits

Do Federal or States Determine Unemployment Benefit Amounts?

In most cases, states determine and supply unemployment benefits. This is why eligibility and pay differ from state to state. There are some unique unemployment cases where the federal government will supplement unemployment benefits. If the country is experiencing a recession or a natural disaster that affects the country (COVID-19 being the most recent example), then the federal government has the ability to pay for expansions and extensions of unemployment benefits offered by the state. 

Unemployment State by State Guides

Each state often has different rules, maximum benefit amounts, and durations, so it's important to understand how unemployment works in your state. As such, we created the following 50 state guides for you to understand how unemployment works in your state.

Let's now cover how the unemployment benefits process works, including how to apply and waiting on your benefits.

Unemployment Benefits Process

Next, let's take a look at how you can receive your unemployment benefits. Remember that there are eligibility requirements that should help you know whether or not you will be allowed to collect unemployment. Let’s take a look at how you should go about filing for unemployment. 

1. Go to your specific state’s unemployment site:

First, you will want to go to your state’s specific unemployment page. Typically this is a part of that state’s Workforce Commission website which assists with multiple parts of employment. However, there might be a site that is dedicated specifically to unemployment. 

Take the time to read through this webpage! The page should have almost all of the information that you need to file a claim. It will tell you things like what your state’s specific eligibility requirements are. It will lay out what you need to do to apply and how you will be collecting unemployment. In many cases, the webpage might even have a virtual Q&A chatbox. This will allow you to ask any questions you still have after reading through the available information. 

2. Apply For Unemployment Benefits

It is likely that you will need to create an account to apply. This will allow them to keep track of your history and progress as your receive unemployment benefits. 
Once you have done that (if it is needed) there are a few things you will likely need to gather. Again, this might vary slightly based on where you live, but you will likely need the following documents/information to submit with your application:

  • The name and address of your last employer’s business
  • First and last dates that you worked for this employer (month, day, and year)
  • Number of hours you worked each week (including Sundays) and your normal pay rate
  • Information/documentation of your normal wage
  • If you are not a registered US citizen, you will need your Alien Registration Number
  • Valid State-based form of ID (like a driver’s license)
Once you have this information, you are likely ready to begin applying for benefits. Luckily, most states offer online applications! This makes it easier to send in the application and, in turn, to begin receiving benefits. Also, make sure you are accurate and honest in your application. If you exaggerate and are overpaid unemployment, there is a chance you will owe the money back once the exaggeration is discovered. 

Each states process may be slightly different, so be sure to check your applicable state guide above.

3. Wait for Your Acceptance or Rejection

Typically, you will have an answer within 2-4 weeks. Because of this, it is pretty important to apply as soon as you can if you anticipate needing unemployment payments. Again, each state is different, but anticipate needing to wait 2-3 weeks to hear back ALONG WITH another week or so before you receive your first payment. This might affect how you plan to budget for that period of time, or whether or not you feel the need to accept part-time work or one-off jobs. 

It is important to note that one of the overarching (nationwide) requirements of receiving unemployment benefits is that the unemployment you are experiencing is of no fault of your own. This means that, in most cases, you cannot have quit your job. It also means that you cannot have been fired because of poor job performance or misconduct. If this is the case, then it is likely you will be rejected. If you are rejected, regardless of the reason, you will likely have the ability to contest the decision. While this might help you receive benefits, it can likely take weeks or even months before a decision is made. 

4. Receive Benefits

If you were approved for unemployment benefits, then you should begin receiving unemployment payments once it goes through. This might take a week or longer to come in, but once it comes in, it will be on a week-by-week basis. Again, this is something that varies from state to state, but in most cases, you will need to request payment either every week or every two weeks, depending on where you live. 

Typically, you will have to answer a few questions each time you request your unemployment check. These questions normally center around whether or not you received any form of income aside from the unemployment check. If you did, it might be deducted from your total amount paid. 

What you are paid is determined by a number of things (and, again, varies depending on where you live). It tends to be based off of a percentage of what you were making when you were employed. 

How Long Does Unemployment Last? 

Once again, this is a decision that is made by your state. However, it does appear that most states offer benefits anywhere from 12-28 weeks, with the most common length being 26 weeks. It appears as though this is not necessarily a consecutive number of weeks. This means that, if you get unemployment benefits for 10 weeks, get a job for 3 months, and then are laid off again, you are eligible for another 26 weeks. Instead, you would be eligible for 16 weeks, accounting for the 10 that you already received benefits.

It’s also important to note that there are some ways that the federal government might extend that time period. This tends to be in times of recession, when the unemployment percentage is high, or in times of national crisis (like the recent COVID-19 pandemic). Your state might also have reasons or ways to extend your unemployment benefits if you are facing extenuating circumstances. Check in with your state’s unemployment benefits page to learn more. 

If you use your benefits and face a financial hardship, you may be wondering, "Can you file bankruptcy while unemployed with no job?" The answer is that you can often do this, but that income is included in the bankruptcy means test.

What Other Things Are Important to Understand About Unemployment?

Here are just a few more things to consider when applying for unemployment benefits:

Income Taxes

Unemployment payments do count as income. So when it comes time to file your taxes, you will have to report anything you received from unemployment on there. This means you might end up paying the IRS if you were not paying taxes in any other way during the year. 

Teacher, Military, and Other Unique Positions

If you were a teacher, in the military, or working in the government, there are special considerations that are made to determine 1. If you are eligible for benefits and 2. What pay you should receive. Make sure you understand what is being asked of you when you are applying since the application might differ slightly. 

Proof of Job Searching

While this might not be true for every state, most states require that you provide proof that you are actively seeking new employment while accepting unemployment benefits. You might receive a quota for how many “job searching activities” you must complete in a week, or they might just request you show proof that you sent your resume in to different companies each week. Regardless of what it is, you might be at risk of losing your benefits if you do not complete the task each week.

Summing it All Up

In the end, while unemployment benefits can definitely help tide you over until you are safely in your new job, it can’t be relied on as a steady or significant stream of income. Take the time that this benefits period gives you to really find a job that combines your passions with your abilities. If you aren’t sure what your financial future looks like because of unemployment, feel free to give our team at Ascend a call. We love talking to people to help figure out the next steps toward a financially stable future.