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How Does Unemployment Work?

April 24, 2020

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If you’re one of the millions of Americans who lost their jobs to the impact of COVID-19, our heart goes out to you. It’s an uncertain time, but unemployment insurance can help ease the pressure.

Most Americans who lost their jobs are able to take advantage of unemployment insurance to help make ends meet until they find new work. This guide is designed to help answer all your questions about unemployment insurance.

What is unemployment insurance and how does it work?

Unemployment insurance is a government program paid into by taxpayers and employers to insure income for people who lose their jobs. They’re paid wages to help keep them afloat while they look for work. Each state is in charge of its own unemployment programs with its own eligibility requirements, benefit allocations, and payment duration.

Do I qualify for unemployment insurance?

Not every jobless person can collect unemployment insurance. State governments define specific requirements for eligibility, but at a high level, the Department of Labor has three rules for determining who qualifies:

    1. You must be available, able, and searching for work
      Your unemployment benefits are contingent on your ability to find another job. To get paid, you’ll need to provide weekly or bi-weekly evidence of your job search: applying to jobs, attending resume-building seminars, interviewing, etc.You can’t collect benefits, if you’re not looking. Some states also require individuals who collect unemployment benefits to accept a position they’re offered, if it meets state standards.


    1. Your job loss must not be your fault
      If you didn’t quit your job or have reason to get fired, you probably meet this requirement. If you were forced to abandon your job or falsely terminated, you may also be able to claim benefits.


    1. You meet state’s requirements for minimum hours worked
      Requirements differ by state, but in short, you’ll need to have logged a specific number of hours per week at your job to be able to draw on unemployment benefits. This can be a little fuzzy, but rest easy that the loss of a long-term, full-time position probably qualifies. 

How much will I be paid during unemployment?

Unemployment benefits are determined by your last job’s wages. Most states offer roughly 50% of your former earnings for a maximum of 26 weeks. 

Support for workers in the Coronavirus Aid, Relief, and Economic Security (CARES) Act gives workers an additional $600 per week through July 31st and a 13 week extension of normal state-delivered support.

Some states offer benefits calculators to help you plan while your application is processing, but nothing is for sure until you’re approved. You’ll be able to find resources on your state unemployment website. 

How do I apply for unemployment benefits?

You’ll start your claim by locating the digital portal for the unemployment office in the state where you worked. If you live in a different state than your former employer is based (or you worked in multiple states), consult with your home state’s unemployment office to determine where you should apply.

To complete your application, you’ll want to gather your contact and banking information, as well as materials to document your recent employment history:

    • State-recognized photo identification


    • Home and mailing address


    • Social security number


    • Your phone number and email


    • Bank account information: 

        • Bank name and address

        • Account and routing number (for direct deposit)


    • Recent employer’s name, address, and phone number


    • Reason for job loss


    • Dates you held the position (first and last day)


    • Severance, vacation, or pension information (if any)

You may be asked about withholdings from your unemployment checks. While it may be tempting to wait, generally, withholding the money is the best option.

What happens after I apply?

After you’ve filed your claim, you’ll receive a confirmation email and an eligibility notice confirming that you qualify. To continue collecting unemployment benefits, you’ll need to submit an additional claim every week or two through your eligibility period. 

This is where you’ll be sharing information about your job search activities, including positions you’ve applied for, interviews you’ve attended, and any offers you’ve turned down. If you do any part-time work while submitting claims for assistance, you’ll need to report those earnings.

How long does it take to get paid?

Again, these details will vary by state. Depending on how quickly you apply, you may or may not be affected by a short waiting period before collecting payment. Many states require a week of downtime after you’ve lost your job, and high volumes can increase the amount of processing for your application. After your claim has been approved, expect to receive your first deposit within two to three weeks. It’s best to apply as soon as possible after a layoff. 

How long can I collect unemployment insurance?

Although individual states’ unemployment programs determine how long you can collect unemployment, generally, you’ll find that most states provide benefits for half a year or 26 weeks. 

Extenuating circumstances can create opportunities for additional benefits; COVID-19 relief programs will extend unemployment insurance by an additional 13 weeks. 

I received a severance package. Am I still eligible? 

If you meet the Department of Labor’s eligibility requirements around job loss and hours worked, you’re still in the clear. 

Your severance package and any vacation time you’re paid out will be factored into your benefits allocation, but neither disqualifies you from collecting payment through unemployment insurance.

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Kayla Moses

Kayla Moses

Kayla Moses is a CX designer and freelance writer based in Austin, Texas. Her work spans a variety of industries, including personal finance, business, and real estate. See more of her personal projects and experience at her website:

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