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How Does Unemployment Work During the COVID-19 Pandemic?

Jul 15, 2020 5 min read Zina Kumok

Key Takeaways

  • COVID-19 has caused millions of Americans to file for unemployment.
  • Benefits have been extended and increased — temporarily.
  • If you haven't been able to file or have been denied, don't give up.



As lockdowns and stay-at-home orders effectively ground the economy to a halt, tens of millions of Americans are facing unemployment and filing for benefits. This includes many who've never spent significant time out of work — and who have no idea how to apply.

To complicate things, Congress has temporarily extended unemployment benefits nationwide, and added $600 to each recipient's weekly check. But with most states reopening their economies to some degree, the jury's out on what's ahead for those out of work.

If figuring out your unemployment situation seems overwhelming, we've got you covered. Here's what you need to know.


How does unemployment work, and who qualifies?

You might assume unemployment insurance is a federal program with consistent rules. In reality, benefits are determined by the state where you work. This can make it hard to find relevant information for your situation.

"It's like 50 different countries, so it's very confusing," says Sandy Smith, a New York City HR professional.

Most states' benefits depend on your previous income: The more money you earned, the more you can qualify for. In California, for example, weekly unemployment checks range from $40 to $450 Opens in new window.

Unemployment benefits are generally available only if you've been employed for the past year, whether at one or multiple jobs. You're eligible if you've been laid off permanently, furloughed temporarily or worked only part-time. (Also, you must be a U.S. citizen or legal alien; undocumented workers don't qualify, even if they pay taxes.)

To see your eligibility, check the unemployment benefits section of your state's labor department website. You should find a table with payment levels and filing requirements.


How the CARES Act affects unemployment

Passed by Congress in March, the CARES Act included Pandemic Unemployment Assistance (PUA). This program offers extra money and more time on unemployment benefits. States now may offer benefits to those who hadn't qualified previously.

Most states limit benefits to 13 to 26 weeks, though some, like Montana and Massachusetts Opens in new window, have longer periods. Some have also added an extra 13 weeks thanks to PUA. "For some states," Smith notes, "unemployment will go until March or April of next year."

Also, the program includes an extra $600 a week in temporary help on top of whatever weekly amount the filer's state provides. (The extra payments will end July 31 unless Congress passes another relief program.)

Even so, that provision has been controversial. For lower earners, the extra $600 may replace all — or more — of their income. That's led to concerns that some people may want to stay unemployed rather than return to work.


Expanded eligibility for benefits

For the first time, self-employed or freelance workers (like writers), independent contractors (like consultants) and gig economy workers (like ride-share drivers) can file for unemployment.

You also might be eligible if you were about to start a job before the pandemic hit. If, for instance, you were hired to wait tables at a diner that closed because of COVID-19, you may qualify for payments — even if you never worked a shift.

Generally, if you maxed out your state's benefits within the past two years, you won't qualify again. Even so, you'd still be eligible for the weekly $600 federal benefit through July 31.

Others who may now qualify:

  • Anyone who can't work because they must handle child care with schools and day care centers closed
  • People (or those in their households) who've been diagnosed with COVID-19
  • Employees under stay-at-home orders who can't physically get to their workplace
  • Those who work for religious organizations like churches, synagogues or mosques


What you need to file

Your state's unemployment insurance department website should explain how to file for benefits. You usually must provide:

  • Your name and address
  • Your employer's contact information
  • Your starting date with your employer
  • When you last worked for your employer
  • Your hourly rate or salary
  • How many hours you normally worked

Important: You must file for benefits in the state where you live now, even if you worked somewhere else for most of the past year. Your current state can guide you on eligibility and whether you should also apply in your previous state.


How to file (and follow up) on your benefits

Most states offer three ways to file: online, over the phone or at an unemployment office. (Yes, some physical branches have remained open during the pandemic.)

With so many Americans filing at once, state hotlines and websites have struggled to keep up Opens in new window. Indeed, applicants report completing forms online only to see the website crash when they hit "Submit." And hours-long waits for phone reps are all too common. (If you're hearing-impaired, use your state's TTY system, which may have fewer people calling in.)

Some have had better luck applying at night. Michelle Wilson, a Dayton, Ohio, marketing manager, tried to file when she was furloughed in late March. After several system freezes and logouts during business hours, she tried again at 10 p.m. — and completed her application without a hitch.


What to do if you're denied

If you've been denied unemployment benefits, Smith urges you to appeal to the state's labor department — and apply again. That's because you might now be approved under PUA rules. In fact, some states are encouraging people to apply even if they expect be denied under the state's guidelines. Says Smith: "You have nothing to lose by applying."

What's more, unemployment benefits are retroactive to the day you lost your job. If your income began to suffer in March but you haven't filed until now, you'll receive money dating back to March.

Also, many states have ironed out the wrinkles in their systems, so you should have fewer problems getting through. Just stay patient — and persistent.



What you can do next

Register or log into your state's labor department website, and check the benefits and eligibility requirements. If you qualify, file for the assistance you need. Remember, just because you can't get through the first time or are denied doesn't mean you won't receive benefits. The silver lining: The payments will back-dated to when you first lost your job.

Here are some resources for support:


Zina Kumok is a freelance writer specializing in personal finance. She has written for the Associated Press, Indianapolis Monthly and more. She also writes a blog about how she paid off her student loans in three years.


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