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How Does the Unemployment Benefit System Work?

Unemployment insurance can be very beneficial for people who have recently lost their job and are in the process of finding a new one. Even though it is commonly discussed, many do not understand how unemployment insurance actually works. Here are answers to some of the most commonly asked questions about unemployment insurance.

What is unemployment insurance?

Unemployment insurance programs are part of a system that is individual for each state but which are governed by federal laws. The system allows for a weekly payment to go towards people who have become unemployed due to no fault of their own.

When can I receive benefits?

Unemployment aid is only available to employees who lost their job due to no fault of their own. Additionally, you must be actively looking for a new job. If you are working part-time or were previously listed as self-employed then you will likely be considered ineligible for unemployment benefits.

Where does the money come from?

Unemployment programs are funded by money contributed by employers within a particular state. Every employer pays a small unemployment tax which can be lowered if they refrain from firing employees without just cause. An employer may be able to lower this amount down to nothing, depending on their state and employment record. The unemployment tax is only used by the unemployment insurance program and only when workers request unemployment benefits.

What excludes me from eligibility?

The main factor that can exclude you from unemployment benefits is the details of why you left your previous job. If you left voluntarily or due to misconduct on your part then you will be ineligible for unemployment aid. Additionally, if you turn down a reasonable job offer while on unemployment, this will also make you ineligible to continue receiving benefits. Finally, if you are receiving workers compensation or other benefits like Social Security, you will be unable to receive unemployment.

What if I am not eligible?

If you are deemed ineligible for unemployment aid, you may be able to appeal the decision. Some companies list employees as “contracted workers.” This means that the worker is listed as self-employed and is, therefore, ineligible for unemployment. Unemployment offices in your state will be where you can go to appeal any unemployment decisions. Additionally, these offices will be who you contact in order to apply for benefits in the first place.

Where do I apply for benefits?

Every state will have a main unemployment office that will provide information on state requirements for unemployment, though some local branches may be open in your area. You can find unemployment offices by searching for them online, or by looking on hub sites like this unemployment office locator. Unemployment offices will be where you go to not only gain information about state unemployment requirements but also to appeal unemployment decisions (ex: if you feel you were wrongly classified as self-employed).

Last Updated: April 06, 2016