UK markets open in 1 hour 11 minutes

What US unemployment benefits can I get during the coronavirus? Your payment options explained

Mario Koran
Photograph: John Locher/AP

As a global health crisis triggered by the coronavirus pandemic careens toward an economic disaster, Americans facing financial hardship are flooding state unemployment departments.

The number of people out of work has surged into the millions and the downturn is already rippling across numerous industries – many restaurants have closed their doors, newspapers are folding, and the film and TV industry is grinding to a halt.

As economists predict a looming recession, experts warn that states such as California may struggle to keep pace and process a deluge of new unemployment claims at once.

Here’s what you need to know about filing for unemployment and getting access to money as quick as possible.

What’s unemployment compensation?

Unemployment benefits are designed to help people who are out of work through no fault of their own. They’re meant as a stopgap measure, as a way to temporarily maintain a portion of income until someone can find a new job.

Unemployment insurance provides on average $300 a week, about a third of the average wage in the US, and typically lasts about four months. The actual amount depends on a person’s past earnings and the reason they stopped working.

The federal government can also grant extensions if economic forecasts don’t improve. Barack Obama extended benefits several times between 2009 and 2013 to deal with rising unemployment rates during the Great Recession.

What does the government’s relief package mean if I’ve lost my job?

In response to coronavirus fallout, national lawmakers are making a broader group of people eligible for unemployment relief, including workers who are sick or have been quarantined, those who have been laid off or had hours reduced due to the outbreak, and people who can’t work because they have to care for children.

The White House and Senate leaders agreed to a $2tn rescue package for the US economy that includes a one-time $1,200 check for many taxpayers, an increase in unemployment payments, and a broadening of the group of workers that would qualify for them.

Workers will see an extra $600 a week layered on top of traditional unemployment benefits, thanks to the package.

The bill also mandates 10 days of fully paid sick leave for employees of companies with 500 employees or less. Parents of those companies affected by their children’s school closing and those leaving for medical reasons can get 12 weeks of pay at 67% of their salary. Companies with under 50 employees can apply for exemptions.

And although typically the self-employed and independent contract workers – such as ride-share drivers and freelance writers – aren’t eligible for unemployment benefits, they are under the new relief package. The aid will look a lot like benefits they would receive under disaster unemployment assistance. Those benefits are provided under a new name: pandemic unemployment assistance.

default

How does it work?

The process varies across states, but follows a general pattern that aligns with federal guidelines.

After a person’s last day of work, they file a claim with their state’s unemployment department, listing income and the reason they stopped working. States such as California are encouraging people to file online as a way to expedite claims.

The department contacts a person’s last employer to verify information and determines a weekly benefit amount based on past earnings and the reason the person stopped working.

Californians who are sick or quarantined would see 60% to 70% of typical earnings, ranging from $50 to $1,300 a week. Those who have had hours cut would get less. The state’s unemployment department has published additional guidance.

How long will it take to get paid?

The department says that it generally takes a couple of weeks from the time a person files to when they can access money.

That’s the best-case scenario; it would most likely apply when cases are clearcut and doctors or employers are quick to respond and verify information.

If doctors or employers delay, or if details are missed on paperwork, it could slow the process considerably, potentially adding weeks or months of wait time. The sudden surge in claims may also make it increasingly difficult to speak with a live customer service representative over the phone if a claim gets hung up.

How many new claims will unemployment departments see?

It’s impossible to say for sure. The US treasury secretary, Steven Mnuchin, warned the national unemployment rate could rise sharply from record lows and reach upwards of 20%.

State unemployment systems were overwhelmed by a sudden surge of new claims. A record 6.6 million people filed claims for unemployment in the US in the last week amid the lockdowns.

How will coronavirus affect the process?

The federal government granted states extra flexibility on how to handle unemployment claims during the pandemic.

Those who aren’t working because they’re sick or quarantined must provide evidence from a healthcare professional who has treated them or ordered them to isolate.

Someone who isn’t sick or quarantined must generally still be looking for work and will be required to contact a certain number of employers, depending on the state.

But hiring freezes, business shutdowns, and the ability to safely look for work could pose new challenges to those on the job hunt.

How is the unemployment department preparing to meet a surge in new claims?

States across the country will face a flood of new unemployment claims, but California, the nation’s most populous state, may be caught particularly off guard.

Loree Levy, the California unemployment department’s top spokeswoman, said the surge is unique from those seen during the last recession, when state unemployment departments had time to prepare.

“Typically, claims ramp up. But this is a big slam all at once. It’s a serious challenge. We’re throwing everything we have at it,” Levy said.

Levy said department staffers have been working overtime and on weekends to process claims. The department is also shifting workers from other departments to help process claims and is looking to retirees who know the system to come back to work.

The department is also looking to add new staff members, but Levy cautioned that this may not help in the short term. “Hiring is not an immediate fix,” she said. “It takes several months for someone to be efficient” in processing claims, she said.

Further complicating matters is the very reason for the unemployment deluge – a highly contagious disease – which will pose new and difficult staffing challenges to process claims. Levy said the department is looking to prepare more of its staff to work remotely.

“I think that’s what made this so complex. We’re concerned about our own employees, but we’re also concerned about providing benefits in a timely manner,” Levy said.

What’s next?

Because funding for state unemployment departments – money that pays for staffing and infrastructure – is based on recent years’ unemployment rates, and because those rates have fallen to record lows, states now face a unique challenge in responding to a crushing demand after years of paring down departments.

“People have been saying for years that the systems are antiquated, and I think we’re going to come to regret that,” said Jesse Rothstein, a labor economist and professor at University of California, Berkeley.

Unemployment trust funds, which provide money to pay out benefits, could also go broke – a concern economists have raised for years. If that happens, states would have to borrow funds from the federal government.

To be ready to respond to a recession, a state should have enough money in its reserve to pay out benefits for a year.

Michele Evermore, a researcher and policy analyst at National Employment Law Project, said that California may be the least prepared of any state to stay solvent.

That’s why Evermore said it’s been crucial for Congress to act quickly to pass economic relief packages that include money to boost state unemployment departments’ administrative funding and allow them to build up departments to meet demand.

“We’re very much on the right track,” Evermore said, but he added the government will need to soon make more support available.

Lawmakers may free up additional relief in the weeks or months to come, and experts say it’s important for the federal government to provide continued support throughout the crisis, beyond the one-off stimulus checks.

Rothstein said: “This is going to be a tidal wave and we need the federal government to open up the checkbook.”