Unemployment Claim

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What Is an Unemployment Claim?

The term unemployment claim refers to the request for cash benefits made by an individual after they are laid off from their job. Claims are filed through state governments for temporary payments after people lose their jobs through no fault of their own.

The United States Department of Labor (DOL) tracks the number of weekly unemployment claims. It provides both seasonally adjusted and seasonally unadjusted claims numbers and also lists increases or decreases of 1,000 or more claims by state. This data is reported in the media as an indication of national and state economic health.

Key Takeaways

  • An unemployment claim is an application for cash benefits that an employee makes after being laid off or other covered reasons, such as the COVID-19 pandemic.
  • Employees who lose a job through no fault of their own may qualify for benefits.
  • Unemployment insurance is paid by states, which collects funds from employers, while administrative costs are covered by the federal government.
  • Eligible individuals can receive up to 26 weeks of benefits, provided they file regular claims.
  • Federal supplements to unemployment benefits for out-of-work individuals during the COVID-19 pandemic expired on Sept. 5, 2021.

Understanding Unemployment Claims

Unemployment claims are paid from state funds that are collected from employers in the form of an unemployment insurance tax. Unemployment benefits are payable for a limited number of weeks and are designed to replace about half of a worker's previous wages. Most states provide up to 26 weeks of benefits for unemployed individuals.

Individuals are required to file unemployment claims with the UI program in the state where they worked. Claims may be filed in person, online, or over the phone depending on the state. When a claim is filed, the following information must be provided:

  • Social Security number
  • Contact information
  • Details about the former employment

Workers must also meet certain criteria in order to be eligible for claims. They must be actual employees of the business, receiving W-2 forms at year-end—not independent contractors or freelancers. They must also have been laid off rather than having quit or been fired for misconduct.

You must demonstrate that you are actively looking for work in order to continue receiving your unemployment benefits.

The initial date of an unemployment claim determines the benefit year during which claimants may file weekly claims as well as the base period of the claim. The base period determines the wages used to compute the weekly and maximum benefit amounts and for which employers will have potential chargeback or reimbursement liability for any benefits paid to the claimant. Only base period employers are part of an unemployment claim. Non-base period employers have no such liability.

Special Considerations

The time you file an unemployment claim is very important. Consider, for example, an employer that hires an employee in March and lets that individual go after 30 days.

If the claimant files an initial claim before April 1, the base period would not include the first quarter of that year (the quarter in progress), nor the fourth quarter of the preceding year (the lag quarter). It actually consists of the fourth quarter of the year before the year preceding the current year, and the first three quarters of the year preceding the current year. However, since the employer did not report wages during that base period, it will have no financial involvement in the claim.

The same applies if the claimant waited until April, May, or June to file the initial claim—in that case, the base period would omit the second quarter of the current year, the first quarter of the current year, and consist of the four quarters of the preceding year. If the ex-employee files an initial claim after June 30 of the current year, then the employer could be a base period employer, but its chargeback liability would be limited due to having paid only 30 days' worth of wages.

Unemployment Claims and COVID-19

The effects of the COVID-19 pandemic rippled through the global labor market. Millions of people found themselves unemployed as a result. The federal and state governments stepped in to help ease the financial burden by implementing a number of employment-related programs.

The $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act and the $2.3 trillion Consolidated Appropriations Act (CAA) signed by Donald Trump in March 2020 and December 2020, and the American Rescue Plan signed by Joe Biden in March 2021 created and expanded the following programs:

  • Federal Pandemic Unemployment Compensation (FPUC), which provided an extra $600 weekly benefit on top of regular unemployment insurance (UI) until July 31, 2020, and an extra $300 benefit on top of regular UI per week after Dec. 26, 2020, and ending on or before March 14, 2021.
  • Pandemic Unemployment Assistance (PUA), which expanded UI eligibility to self-employed workers, freelancers, independent contractors, and part-time workers impacted the pandemic.
  • Pandemic Emergency Unemployment Compensation (PEUC), which allowed workers to receive UI benefits for an extra 24 weeks after regular they exhausted unemployment compensation benefits. Benefits were extended for an extra 13 weeks (under the CARES Act) and for another 24 weeks (under the CAA Act) for a total of 53 weeks, including the standard 26 weeks of unemployment.

These programs officially expired on Sept. 5, 2021. Eligible individuals may still qualify for state UI benefits as long as they are still unemployed and within the first 26 weeks of their benefits.

The IRS also announced it would automatically adjust the tax returns of anyone who filed early and declared all of their unemployment income for the 2020 tax year.

Article Sources

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  2. New York State Department of Labor. "Expiration of Federal Unemployment and Pandemic Benefits." Accessed Jan. 12, 2022.

  3. Center on Budget and Policy Priorities. "Policy Basics: Unemployment Insurance." Accessed Jan. 12, 2022.

  4. United States Department of Labor. "Unemployment Insurance," Pages 1-2. Accessed Jan. 12, 2022.

  5. National Conference of State Legislatures. "States Roll Back Benefits as Jobs Remain Unfilled." Accessed Jan. 12, 2022.

  6. United States Department of Labor. "Unemployment Insurance," Page 2. Accessed Jan. 12, 2022.

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  8. U.S. Department of Labor Employment and Training Administration. "American Rescue Plan Act of 2021," Page 8. Accessed Jan. 12, 2022.

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  12. Internal Revenue Service. "IRS to Recalculate Taxes on Unemployment Benefits; Refunds To Start in May." Accessed Jan. 12, 2021.