As states close down and businesses are shuttered because of COVID-19, the illness caused by the novel coronavirus, record numbers of the newly out-of-work have been applying for unemployment insurance (UI) to help pay the bills. On March 26, 2020, the U.S. Department of Labor (DOL) announced that in the week ending March 21, 3.28 million new benefit claims had been filed, an increase of more than 3 million from the previous week, far outstripping the previous high of 695,000 in October 1982.

The DOL has already provided new guidance to increase the flexibility that states have in administering their unemployment insurance. Now, thanks to the CARES Act, a $2 trillion economic relief plan passed by Congress and signed by President Trump on March 27 has expanded unemployment benefits to Americans who have been affected by the coronavirus pandemic.

As states ramp up in the face of the tsunami of claims, here is what you need to know about applying for unemployment insurance right now.

Key Takeaways

  • Unemployment insurance claims related to COVID-19 catapulted to 3.28 million in the week ending March 21, 2020.
  • The new CARES Act has expanded unemployment insurance eligibility to gig and freelance workers and part-time workers who have been affected by the coronavirus pandemic.
  • In addition to receiving a percentage of their salary, unemployed workers who can't work because of COVID-19 are eligible to have $600 a week added to their checks through July 31.
  • Most states recommend applying for UI online and following website updates for news.

Benefits of the Stimulus Plan for the Out-of-Work

The new legislation boosts the benefit amount that people can get, extends benefits, and makes unemployment insurance available for groups of people who would otherwise be ineligible for UI. Here are details of the plan, culled from numerous news reports:

  • Unemployment benefits, which are provided by the individual states and usually replace 40% to 45% of earnings, are to be supplemented by an additional $600 a week for four months, covering unemployment through July 31.
  • Part-time workers, members of the gig economy, and other self-employed people who can't work because of COVID-19 can now file for UI.
  • People who can't work because their employer temporarily ceased operations due to COVID-19; who are quarantined or self-quarantined, but expect to return to work after the quarantine is over; who contract the virus or who have to stop working to care for a family member; or who cannot work because school, day care, or another facility for a child or elderly parent has shut down, are all eligible for unemployment benefits.
  • States provide benefits for up to 26 weeks (see the map, below), and the legislation provides for an extra 13 weeks. Depending upon when you become unemployed, the benefits could stretch through Dec. 31, 2020.
  • If you are already receiving unemployment benefits unrelated to COVID-19, state-level benefits can be extended another 13 weeks, and you will also receive the extra $600 per week.
  • If your UI benefits have run out, you can reapply and get at least another 13 weeks and the extra $600 a week.

People who can work from home, as well as those receiving paid sick leave or paid family leave, are not eligible for unemployment insurance benefits.

How Unemployment Insurance Is Administered

The country's unemployment insurance system is run by the individual states—which generally set up their own eligibility criteria and benefits levels and pay the actual benefits—but is overseen by the federal government, which pays administrative costs and will now also pay for the added $600-per-week benefit. Ordinarily, most states provide up to 26 weeks of benefits to unemployed workers to replace roughly half of their previous wages, up to a maximum benefit amount.

In Jan. 2020, benefits averaged about $385 nationwide but ranged from a low of $213 in Mississippi to $546 in Massachusetts.

What You Can Expect

To apply for UI, you must follow your state's guidelines, which you can link to via the DOL website, CareerOneStop. Anecdotal accounts are accumulating of state unemployment websites crashing and jammed phone lines, which means you likely will have to be patient. One of the problems: State unemployment offices are understaffed because head count is pegged to the unemployment rate, which had been at historically low levels before the pandemic hit. That means states are playing catch-up in trying to meet the new surge.

The New York Department of Labor website, for example, notes, "Due to enormous volume our systems are slow but we are serving each and every New Yorker. Please be patient." New UI filers are instructed to apply for benefits on a specific day of the week according to the first letter of their last name and reassured that any claim filed "will be backdated to the date you became unemployed." As of March 29, the Colorado Department of Labor and Employment, on the other hand, tells the newly unemployed not to file for UI benefits yet, but notes that the state "will backdate and back pay claims as appropriate based on the law and guidance."