Dealing with Unexpected Job Loss (Part 3)
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First Things First


The shock of losing your job can be overwhelming. However, the decisions you make during this time are crucial to making a successful transition to a new position.



Unemployment Benefits


One of the first things to do after being fired is to check into unemployment insurance benefits. If you are fired from a job, you are generally eligible for unemployment compensation unless your employer proves you left your job voluntarily (you quit or resigned), or you were discharged for misconduct. (And there is an appeals process even if your employer initially makes this claim.)



The unemployment insurance system (UI) is a partnership of the federal government and state programs. Created in 1935, contributions are paid into the system on behalf of workers so they have an income if they lose their jobs. The basic UI program is managed by the states, although the U.S. Department of Labor oversees the system. States provide most of the funding and administer the benefit payments. Although states must follow federal requirements, they generally establish their own eligibility criteria and benefit levels.



As of January 2013, regular unemployment insurance benefits — in most states — run for 26 weeks (plus one unpaid “waiting week”). For people who have not yet found a job within that time frame, Emergency Unemployment Compensation (EUC) and Extended Benefits (EB) offer additional compensation. Each of these programs has a different deadline. Consequently, the number of weeks you are eligible for will depend on when you filed your original claim.



The permanent Extended Benefits (EB) program typically provides an additional 13 or 20 weeks of compensation to the unemployed who have exhausted their regular benefits in states where the unemployment situation has worsened dramatically.



Your unemployment payment depends on your weekly earnings prior to being laid off, and the maximum amount of unemployment benefits available (this will vary by state). Unemployment benefits typically replace about half of your previous earnings, subject to a maximum benefit level. The maximum state-provided weekly benefit in 2012 ranged from $235 in Mississippi to $653 ($979 with dependents) in Massachusetts. (Some states offer higher benefits to jobseekers with dependents.) Because the benefit is subject to a cap, unemployment insurance benefits replace a smaller share of previous earnings for higher-wage workers than for lower-wage workers.



The average unemployment benefit was about $300 per week in 2010, 2011, and 2012.



The unemployment insurance program provides benefits to people who:
  • have enough employment to establish a claim

  • have lost employment through no fault of their own

  • Are ready, willing, and able to work

  • Are actively seeking work


Check and see if your state offers an unemployment benefits calculator. (A simple Google search can identify if one is available.) There are two types of unemployment calculators — one that tells you how much money you are entitled to collect, and another which tells you how many weeks you are eligible to collect unemployment.



You may be eligible for unemployment benefits if:
  • Your job was eliminated

  • Your employer fired you because you could not meet their performance or production standards, or their qualifications for the position

  • You lost your job due to lack of work

  • There was an involuntary reduction in force

  • Your temporary or seasonable employment position ended

  • The company downsized or shut down

  • The company restructured or reorganized


You may not be eligible for benefits if:
  • You were fired because you violated a company policy, rule, or procedure (including absenteeism or insubordination)

  • You quit your job without good cause

  • You are out of work because of a work stoppage (except for lockouts) that violated an existing collective bargaining agreement where you worked


File your claim for unemployment benefits as soon as possible. If you wait, you may lose out on benefits. You must meet eligibility requirements, but you can determine these from your state’s unemployment office. You may even be eligible for benefits (even partial benefits) if you work part-time. You may also be eligible to collect unemployment benefits while you are collecting severance or other benefits from your current position. Getting paid for unused vacation time you accrued normally does not affect your eligibility. However, you will not be eligible for benefits if you continue to receive your full salary and benefits your employer paid while you were employed.



One thing you may not have realized is that unemployment benefits count as taxable income on your federal tax return. Unemployment compensation may or may not be taxable in your state. Check with the Department of Labor in your state for information. Make sure you set aside part of the money for taxes if taxes are not withheld from your payment. (In many states, you must request that taxes be withheld from your payment.) You may have to make quarterly estimated tax payments if you do not have taxes withheld from your unemployment benefit payments. Check with your tax advisor for advice.



Self-Employment


Getting fired may also open a new door to self-employment. But if unemployment benefits require jobseekers to continue looking for traditional work full-time, someone pursuing self-employment may lose their unemployment benefits, because they are not “actively seeking work.” In 2012, the Middle Class Tax Relief and Job Act authorized $35 million in funds to encourage states to enhance and promote Self-Employment Assistance (SEA) programs.



SEA entitles unemployed individuals to claim jobless benefits while simultaneously gaining access to small business development assistance. An individual with a “viable” business plan can continue to receive unemployment benefits as long as they are working full-time to get a new company off the ground. Under this program, individuals receive financial aid equal to their unemployment insurance benefits for a maximum of 26 weeks while they receive entrepreneurial training and other resources (including counseling and technical assistance) to help them launch a business. However, note that you are not eligible to receive extended unemployment benefits if you participate in the SEA program — you are limited to 26 weeks of payments. Check with your state’s Department of Labor to see if they offer a SEA program.



There are also retraining and job support services available through the federal government. The national system of local One-Stop Career Centers (established by the Workforce Investment Act of 1998) offers job search assistance, career counseling, job search workshops, labor market information, and other employment services. You may access many of these services for free. Some programs provide funds for transitional training to individuals unable to obtain or retain employment.



Retraining and Other Benefits


Some of these services are authorized through the Trade Adjustment Act (TAA) program to assist employees who lost their job due to international competition — for example, if their company shifted production or services offshore. TAA-eligible workers may also receive job retraining. The total period of unemployment benefits for a TAA-certified individual may last as long as 130 weeks.



The Workforce Investment Act of 1998 also authorized programs for job training and vocational rehabilitation. These programs are administered by each state, so check with your state’s Department of Labor office for eligibility and access. In some states, you may be receive one-on-one job counseling services (“intensive services”), including career testing, development of an individual employment plan, and group or individual counseling and career planning. These services can be accessed in addition to your work with a professional resume writer. You may also be eligible to receive occupational skills training, private sector training programs, entrepreneurial training, adult education programs, and customized training, although some programs are only available to low-income individuals.



Take advantage of the programs available to you. Many of these are paid for through state and federal funds. This isn’t charity. These are programs paid by tax dollars, and the goal is to get you back working again.