As states closed down and businesses shuttered because of COVID-19, record numbers of the newly out-of-work applied for unemployment insurance (UI) to help pay their bills. In the week ending March 28, 2020, the U.S. Department of Labor (DOL) announced that 6.6 million new benefit claims were filed, compared to 3.3 million the previous week.

The DOL provided guidance to increase the flexibility that states had in administering their unemployment insurance. The Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2 trillion economic relief plan passed by Congress and signed by President Donald Trump on March 27, 2020, expanded unemployment benefits to Americans who had been affected by the coronavirus pandemic. These provisions were extended again by two other laws passed by both President Trump and President Joe Biden when he assumed office.

Keep reading to learn more about the basics of how unemployment works, including the new provisions added due to the COVID-19 pandemic.

Key Takeaways

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

Am I Eligible for Unemployment Insurance?

The CARES Act boosted the benefit amount that people could get, extended benefits, and made unemployment insurance available for groups of people who were otherwise be ineligible for UI. These benefits and provisions were extended after the passing of both the Consolidated Appropriations Act and the American Rescue Plan Act of 2021. There are several different programs, so pay close attention to the details of the assistance.

Federal Pandemic Unemployment Compensation (FPUC)

Under the Federal Pandemic Unemployment Compensation (FPUC) program, unemployment benefits were supplemented by an additional $600 a week for four months. According to the U.S. Department of Labor, "FPUC is not payable for any week of unemployment ending after July 31, 2020." This applied to those who are eligible for benefits under the next two programs (PUA and PEUC).

The Consolidated Appropriations Act signed by President Trump continued providing unemployed individuals with the flat amount but reduced it from $600 to $300 each week starting Dec 26, 2020. This provision was set to expire on March 14, 2021, but was extended once again with the Biden administration's American Rescue Plan Act. The FPUC is set to expire under the Act on Sept. 6, 2021.

Pandemic Unemployment Assistance (PUA)

Under the CARES Act, freelancers and independent contractors, workers seeking part-time work, those without a substantial work history to qualify for state unemployment insurance benefits, and workers who otherwise wouldn't have qualified for benefits under state or federal law could file for unemployment insurance under the Pandemic Unemployment Assistance (PUA) program.

To qualify, individuals are required to self-certify that they are able to work, are available for work, and are unemployed, partially employed, unable, or unavailable to work because of one of these COVID-19-related scenarios:

  • You were diagnosed with COVID-19 or have symptoms of it and are trying to get diagnosed
  • A member of your household was diagnosed with COVID-19
  • You were providing care for someone diagnosed with COVID-19
  • You were providing care for a child or other household member who can't go to school or another facility because it's closed due to COVID-19
  • You were quarantined or have been advised by a health care provider to self-quarantine
  • You were scheduled to start a job and didn't have a job or couldn't reach the job due to COVID-19
  • You became the primary earner for a household because the head of household died as a direct result of COVID-19
  • You had to quit your job as a direct result of COVID-19
  • Your place of employment was closed as a direct result of COVID-19
  • You met other criteria set forth by the Secretary of Labor

Benefit amounts are calculated based on previous earnings, using a formula from the Disaster Unemployment Assistance program. A minimum benefit is available that's equal to 50% of the state's average weekly UI benefit (about $190 per week).

If you applied or are planning on applying for unemployment insurance under the Pandemic Unemployment Assistance (PUA) program, check with your individual state to determine when your last PUA payment will be issued.

Pandemic Emergency Unemployment Compensation (PEUC)

States provide benefits for up to 26 weeks (see the map, below), but what if you exhaust your unemployment benefits?

Under the Pandemic Emergency Unemployment Compensation (PEUC) program, you were eligible for an extra 13 weeks of UI under the CARES Act, though you had to be "able to work, available to work, and actively seeking work." States were required to offer flexibility to applicants in meeting PEUC eligibility requirements related to "actively seeking work" if an applicant's ability to find work was affected by COVID-19.

That 13-week period was extended to 24 weeks when the CAA was signed in December 2020. President Joe Biden's American Rescue Plan added an additional 29 weeks for a total of 53 weeks for the PEUC program.

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 $300-per-week benefit. This benefit, of course, replaced the original $600 weekly payment. 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.

The amount of unemployment benefits varies widely by state. The minimums available start at $5 in Hawaii and go up to a maximum of $1,234 in Massachusetts.

How to Apply for Unemployment Insurance

To apply for UI, you must follow your state's guidelines, which you can link to via the DOL website, CareerOneStop. Depending on the state, you can file a claim in person, online, or over the phone. When you file a claim, you must provide your Social Security number, contact information, and details about your former employment.

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 headcount 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 there will be considerable wait time. Please be patient; everyone who is entitled will get their benefits." 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."

Warning: If You Are Offered Your Old Job Back

Some people may be tempted to stay on unemployment instead of returning to work—at least through the period where FPUC provided that extra $300 per week, in addition to each state's regular unemployment payment. Be wary of following that approach.

Businesses who received loan forgiveness under the Paycheck Protection Program (PPP) have been pushing for an answer to whether they would lose loan forgiveness if laid-off employees refuse to return when offered their old jobs back (the extra payments mean many are making more on unemployment than they did at work). The Treasury Department issued an FAQ saying this would not happen if they make a good-faith, written offer to rehire a laid-off employee (same hours, same wages) and have documented evidence of being turned down by the employee.

But here's what that FAQ also said: "Employees and employers should be aware that employees who reject offers of re-employment may forfeit eligibility for continued unemployment compensation." In other words: Refuse to go back and you could lose your unemployment insurance.