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A Short Course On Unemployment Benefits

Shelly K. Schwartz,|Special to CNBC.com
Thursday, 26 Feb 2009 | 2:55 PM ET

For many Americans, the current recession is their first brush with unemployment.

Beyond the uncertainty over how long they’ll be looking for work, the newly jobless face a host of new questions over how to navigate a system of unemployment insurance benefits they may have helped fund during their career but know little about.

What happens if you land part-time work while collecting benefits? What if your employer challenges your claim? Do you even qualify?

“When people lose their jobs they’re not quite themselves and it can be hard to stay focused on all the right issues because there’s so much coming at them all at once,” says Patricia Sigman, a labor and employment attorney with Sigman & Sigman PA in Altamonte Springs, Fla., who is juggling a sudden surge of unemployment claims cases.

"Even highly organized individuals can have a hard time organizing their thoughts and paperwork in this stressful situation," she adds.

Fortunately, the process of filing for unemployment is becoming far more streamlined, requiring little more than a phone call or online application in many states.

At the same time, Pres. Obama’s $787 billion stimulus bill just extended the number of weeks Americans can file for unemployment benefits and pumped more money into the system, granting eligible recipients an extra $25 per week.

Here’s how to get what’s coming to you—and how to avoid the biggest mistakes.

Eligibility

First, the rules.

Each state administers its own jobless program, operating under federal guidelines, and each has its own laws for determining eligibility as well as benefit amounts and duration.

A list of contacts for unemployment agencies in all 50 states, plus Puerto Rico and the U.S. Virgin Islands, is available online.

By and large, though, you will only be able to collect unemployment if you lost your job through no fault of your own.

If you quit because you didn’t like your boss, you’re out of luck – though agencies do make an exception if you can prove you had “good cause” for walking away. Normally, that includes things like unsafe working conditions or the employer’s failure to follow wage-and-hour laws, but the burden is on you to make your case.

You must also be actively seeking work by making reasonable efforts to find employment. Criteria vary by state.

Just be sure to keep a log of every place you’ve sent your resume and each interview you’ve had. You’ll need to have it if you’re summoned for an eligibility review.

Lastly, you will not be eligible for jobless benefits if your employer can prove you were fired due to misconduct, including theft of property or failing a drug or alcohol test.

Benefits

The maximum weekly benefit available varies by state.

In California, for instance, it is $450, while in Louisiana, it is $284.

Just because you qualify for unemployment, however, does not mean you are entitled to collect the maximum benefit.

To determine your eligible amount, most state agencies will assess your wages during the first four of the last five calendar quarters—also known as your “base period.”

You will receive a percentage of your weekly wage (usually 50 percent) while you were employed.

It is possible to work part-time or in a temporary job while continuing to collect benefits, but you must report your earnings which, over a certain amount, will be deducted from your benefits.

Unemployment benefits, of course, are intended to provide temporary financial relief to the jobless. As such, there’s a limit to how long you can collect. Most states distribute benefits for a maximum of 26 weeks.

However, due to the high unemployment rate, lawmakers have allowed states to temporarily extend benefits for an additional 13 weeks.

On top of that, states that are experiencing “extremely high unemployment levels” were given permission to pay up to seven more weeks (20 weeks maximum) of extended benefits. States qualify if their three-month average total unemployment rate is at least 6 percent, the Labor Department reports.

Employment Law

If your application for unemployment benefits gets denied, because you quit without good cause or were fired for misconduct, you do have the right to appeal.

Woman filing for unemployment
Woman filing for unemployment

Typically, your state will schedule an informal hearing before a state official, which may be done by phone, at which time you should present all evidence and testimony to support your case.

That includes written documents, such as personnel files, time cards, letters from your employer, evaluations, testimony from witnesses and personal testimony.

If the decision is again made to deny your claim, you have one shot left—a second appeal with the Board of Review, which typically does not conduct hearings and decides the case based upon previously submitted evidence.

One final note: After you file for unemployment benefits, your employer does have the right to challenge your claim, on grounds you either quit without good cause or were terminated for misconduct.

“We’re getting a lot more people calling in these days because their employers are fighting their unemployment claim,” says Sigman. “A lot of employers confuse their right to terminate an employee with their right to deny that employee unemployment compensation. Poor performance is not misconduct.”

If this happens to you, Sigman says it’s important to review the points of law that pertain to your case so you can better build your defense.

“Sometimes you have employees who have collected significant amounts of benefits and, if they lose after the lengthy appeals process, they are in jeopardy of having to pay it all back in full,” she says. “If there’s a lot of money at stake it may make sense to hire a lawyer.”

Depending on location, employment lawyers charge anywhere from $125 to $350 an hour.

Though it’s not always cost effective to hire a lawyer to complete your entire appeal, it may be worth shelling out to have one help you prepare your own case.

“The hearings are designed so that you can represent yourself,” says Sigman. “It’s not like court. You can do it. You just need to be prepared.”

Learning The Rules

Finally, throughout the process of collecting unemployment, there are countless deadlines and rules to which you must adhere.

There’s no time limit for filing for unemployment after losing your job, for example, but if you wait too long your most recent work experience may no longer be available to establish a claim.

You also only have a few weeks (usually 21 days) to file an appeal if your claim is denied.

“If you don’t get around to it because you’re so busy looking for another job, then you won’t be able to appeal at all,” says Sigman. “Watch those deadlines."

Of course, you must pay federal income taxes on your benefits—and it must be reported on your federal income tax return.

Lastly, if you find a job while collecting unemployment, you must notify your state at once. Whatever you do, don’t continue to claim benefits thereafter.

That will result in an overpayment and you’ll be required to repay that amount, plus penalties and interest.

Failure to do so will result in liens and other collection activities, and you may forfeit your right to future benefits if you again find yourself unemployed.

“There are a lot of rules to follow,” says Sigman. “In Florida, for example, any paper evidence to support an appeal must be submitted in advance so people often make the mistake of getting on the phone for the hearing and wanting to introduce documentation. You need to learn the specific rules for your state and stay organized.”