Your Guide To Navigating Actions After Losing a Job: Unemployment Compensation

November 14th, 2024 by Blake Pinyan

Losing a full-time job, especially unexpectedly, can be a significant source of financial stress and anxiety. This can be particularly difficult for those who are content with their positions, whether it’s due to compensation, company culture, coworkers, or other factors. Now, they must confront the reality of no longer being part of the team.

However, not all job losses are negative. Some can provide an opportunity to change careers or pursue a role that brings more joy and fulfillment. Regardless of whether your job loss is positive or negative, there are important considerations to keep in mind.

This article will cover all aspects of unemployment compensation, including:

• What is Unemployment Compensation
• Who is eligible
• The filing process
• Payment
• Certification

What Is Unemployment Compensation

Unemployment compensation, as the name suggests, is money paid to individuals who are unemployed and actively seeking work. It’s important to note that unemployment benefits are administered at the state level, not the federal level. Each state has its own program and guidelines, which are established by federal law. This means that the application, payment, and reporting processes are handled by your respective state’s unemployment program. Therefore, it’s crucial to consult your state’s specific procedures and guidelines.

For the purpose of this article, we’ll use California’s Unemployment Program as an example. This program is administered by the Employment Development Department (EDD).

Who’s Eligible

To be eligible for Unemployment Compensation in California, you must:

• Have earned enough wages during the base period.
• Be totally or partially unemployed.
• Be unemployed through no fault of your own.
• Be physically able and available to work.
• Be actively seeking work each week.
• Be ready and willing to accept suitable work immediately.

Earned Enough

The “base period” is a 12-month period used by the California EDD to determine your eligibility for unemployment compensation. To qualify, you must have earned at least $1,300 in your highest-earning quarter of the base period, $900 in your second highest-earning quarter, and a total base period earnings of 1.25 times your highest-quarter earnings. In simpler terms, you must have received a W-2 and lost your job due to a layoff, furlough, wage reduction, or reduced hours.

Partially Unemployed

You can be partially unemployed (working part-time) and still receive unemployment compensation in California. However, your weekly benefit amount will be reduced by your part-time earnings.

No Fault of Your Own

Typically, individuals who are laid off are eligible for unemployment benefits. However, if you were fired, the termination must not be due to misconduct. This means your employer cannot prove that you engaged in any type of misconduct, such as unsatisfactory work, unreliability, failing or refusing a drug or alcohol test, theft or committing a crime. Minor incidents may not necessarily disqualify you. Misconduct is generally defined as serious offenses, such as insubordination or theft.

If you quit your job, you may still be eligible for unemployment benefits under certain circumstances. You will need to participate in a phone interview with the CA EDD, and your employer may be involved. To qualify, you must demonstrate that you had a good cause for quitting, such as unsafe working conditions, a doctor’s recommendation, or protecting yourself or a family member from domestic violence. You must also show that you made reasonable attempts to keep your job, such as requesting a leave of absence or transfer.

Other Circumstances

Two other circumstances my qualify you for unemployment benefits:

• Disaster Unemployment Assistance: This program provides benefits to individuals who lose their jobs due to a natural disaster.
• Training Benefits Program: This program provides benefits to individuals who are unemployed and enrolled in approved training programs.

Individuals who are unable to work due to illness, injury, or the need to care for a family member may be eligible for California’s Disability Insurance and Paid Family Leave programs as opposed to unemployment compensation.

Ready to Work

Other requirements for unemployment compensation include the ability and availability to work, actively seeking employment, and being willing to accept suitable work immediately when offered. The State of California, like many states, does not want to pay benefits to individuals who are not actively seeking employment.

Appealing a Decision

If your unemployment benefits application is denied or you are required to repay benefits, you have the right to appeal. You will typically receive a Notice of Determination explaining the reason for the denial. You must submit your appeal in writing within 30 days of the date on the form. An administrative law judge will review your case, and you should include any supporting documents that demonstrate your eligibility for benefits.

Expiration of Benefits

In California, you may be able to file for unemployment benefits more than once under certain circumstances. For example, you can reopen a claim within a 52-week period if you have unused benefits. Alternatively, you can reapply if you have earned enough wages in the past 18 months and remain unemployed or are working part-time.

Self-Employed Individuals

Self-employed individuals and independent contractors may be eligible for unemployment benefits in California under certain conditions. You must have worked for an employer in the past 18 months who paid into the Unemployment Insurance system. If you believe you were misclassified as an independent contractor and should have been classified as an employee, you can still file a claim, and your case will be reviewed based on the information provided.

The Filing Process

Filing for unemployment compensation involves four key steps: when to file, what you need to file, how to file, and what comes after filing.

When to File

You can file for unemployment compensation in California during the first week you lose your job or have your hours reduced. Your claim will begin on the Sunday of the first week you file, and you must wait one week before receiving benefits. To count toward the waiting period, you must meet eligibility requirements and certify your benefits. Your first certification typically includes the one-week unpaid waiting period and one week of paid benefits, assuming you meet the eligibility requirements for both weeks.

What You Need to File

To file your unemployment compensation claim, you’ll need to gather information about your last employer, employment history, and personal identification.

Last Employer Information:

• Name of company and manager
• Company address
• Company phone number
• Date of separation and reason for leaving
• Gross earnings from your last week of work (use your final or most recent paystub)
  • Note: Gross earnings refer to the amount you were paid before taxes and deductions, not your net paycheck.

Employment History:

• Dates of employment for each job
• Hours worked per week and hourly pay rate for each job
• Information about other employers in the past 18 months

Personal Identification:

• A personal photo
• A photocopy of a valid ID

You may need to provide additional documentation if requested.

How to File

There are three primary methods to file for Unemployment Compensation in California: online, by phone, or by mail or fax.

Online:

This is the fastest and most efficient method for those who are comfortable with technology. To apply online, you must first register and create an account on the myEDD portal. The EDD website recommends filing online as the quickest method.

By Phone:

You can also file your claim by phone. The number for English-language services in California is 1-800-300-5616. The phone lines are open Monday through Friday from 8:00 AM to 5:00 PM PST. To avoid long wait times, it’s recommended to avoid calling on Monday mornings before 10:00 AM PST. While this method is suitable for those who lack computer access or online skills, it can be less efficient due to potential wait times.

By Mail or Fax:

Filing your claim by mail or fax is the slowest method. It can take several days for your application to reach the EDD and be processed. However, if you prefer this traditional method, you can mail or fax your completed application to the address or number listed on the physical application form.

Regardless of the method you choose, you will need to provide information about your last employer, employment history, compensation, and reason for leaving. Your application will be reviewed, and you may be required to participate in a phone interview for verification. If approved, you will begin receiving benefits after the one-week waiting period.

Post-Submission

After submitting your California Unemployment Insurance application, you can expect to receive the following documents:

• Unemployment Insurance Claim Filed: A confirmation of your application.
• Notice of Unemployment Insurance Award: A statement of your weekly benefit amount and the maximum benefit amount.
• EDD Customer Account Number Notification: Your account number for accessing UI Online.
• Unemployment Insurance Benefits What You Need To Know: Information about eligibility requirements and recertification.
• Continued Claim: A form for recertification.

If you notice any errors on these documents, contact the EDD promptly. Your eligibility and wage information will be verified after you submit your application.

If your claim status shows “Pending,” it likely means your eligibility or identity needs to be verified. You can check your online account for updates and instructions on the next steps.

Payment

Eligible individuals in California can receive unemployment compensation benefits ranging from $40 to $450 per week. The specific amount is determined by the EDD based on your earnings over the past 12 months. Individuals who have not worked in the past 18 months will not be eligible for benefits as they have not earned sufficient wages to qualify.

The EDD provides an Unemployment Calculator where you can input your earnings from the past 12 months to estimate your weekly benefit amount. You can also calculate this manually by dividing your highest-earning quarter’s wages by 26. For example, if your highest-earning quarter’s wages were $8,000, your weekly benefit would be $307. If your highest-earning quarter’s wages were $20,000, your maximum weekly benefit would be $450.

In California, unemployment benefits are typically paid for a maximum of 26 weeks. However, there may be exceptions in specific circumstances, as seen during the COVID-19 pandemic.

If you receive income while collecting unemployment benefits, your benefits will be reduced. Specifically:

• $100 or less: Your benefits will be reduced by the amount exceeding $25.
• $101 or more: The first 25% of your earnings will be excluded, and the remaining amount will be subtracted from your weekly benefit.

This reduction applies to the week in which the wages were earned, not necessarily the week they were paid. While severance pay generally does not affect benefits, other types of income, such as workers’ compensation, may.

Certification

To continue receiving unemployment benefits, you must certify your eligibility every two weeks. This certification process involves confirming that you:

• Are physically able and available to work
• Are actively seeking work each week
• Are ready and willing to accept suitable work immediately

You can certify your eligibility online, by phone, or by mail. The California EDD recommends certifying online as the fastest and most efficient method. This involves answering a series of questions to confirm your continued unemployment status and eligibility for benefits. The EDD provides resources to assist you with this process.

It’s important to report any wages or work activity during your certification period. If you provide information that indicates you may no longer be eligible, you may be required to participate in a phone interview, complete an eligibility questionnaire, or provide additional information by mail.

Your first certification period will begin two weeks after you file your initial unemployment claim. Timely certification is crucial, as early or late submissions may delay or deny your payment. As long as you continue to meet the eligibility requirements, you can expect to receive your benefit payment within 10 days of submitting your certification.

Be sure to provide accurate information during the certification process. False or misleading information constitutes fraud and can result in serious penalties, including disqualification from unemployment insurance, loss of benefits, and potential criminal prosecution.

Conclusion

While losing a job can be financially stressful and emotionally challenging, unemployment compensation can provide a temporary financial lifeline while you search for new employment.

At Anchor Bay, we’re committed to supporting our clients through both good times and bad. Losing a job can be a particularly difficult time, and that’s when you need a financial planner most. We can help you develop a financial plan to navigate this challenging period.