Unemployment Claim

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.

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:

Workers must also meet certain criteria in order to be eligible for claims. Workers who receive unemployment benefits, for example, must be actively seeking employment and be able to prove it. They must also have been laid off rather than having quit or been fired.

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.

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

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.

These programs officially expired on Sept. 5, 2021. Eligible individuals may still qualify for 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.