Unemployment Compensation Explained
Unemployment Compensation Explained

Unemployment Compensation Explained

Unemployment compensation provides a valuable cushion against lost income from temporary unemployment. If you suddenly lost your job, you may not only be wondering if you are entitled to the benefit, but also when you will receive compensation, how much you will receive and for how long. The answer depends on in which state you work and how your employment was terminated. Let’s dig in a little further.

Where Does The Money Come From?

The United States Department of Labor oversees the unemployment system, but each state runs its own program and has its own set of rules and regulations. While you were working for your employer, they were paying an unemployment tax to the state in which you work. The state tax paid by your employer goes into an unemployment fund which is used to pay employees when they are terminated without cause (more on this below).


Not all employees are eligible to receive unemployment compensation. To be eligible for unemployment insurance benefits, you must meet three requirements:

  1. lost your job through no fault of your own (this means that you didn’t do something that caused you to get fired); and
  2. you must be “able to work, available to work, and actively seeking work;” and
  3. have earned a certain amount of money before becoming unemployed.

Each of these rules are interpreted differently by state. For example, you may have had to work longer for an employer in one state versus another to be eligible. Also, some states allow part-time workers to collect benefits and others do not. A link to each state’s unemployment site is found at the end of this article.

How Much Unemployment Compensation Will You Receive?

You will receive unemployment compensation from the state in which you worked, regardless of where you live. States vary on how much unemployment compensation is granted. The average is about a little more than $400 per week. This is an average and your amount will vary greatly depending on the state and your previous earnings. State laws typically aim to replace about half of your earnings with a maximum benefit allowed. Some states also increase benefits if you have dependents. See the links below for state specific guidelines.

When And How Long Will I Receive Benefits?

In most states, workers are eligible for a maximum of 26 weeks. If you had a brief work history or uneven earnings, you may not be eligible to receive benefits for 26 weeks. This will depend on the state in which you worked. On average, it takes about 4 weeks from the time your unemployment application to receive your first payment.

State Unemployment Links

DisclaimerThis article is intended for informational purposes only. It provides general information and is not intended and should not be construed as professional advice. The author is not your attorney, accountant, financial planner or any other professional and no professional-client relationship is created. We do not represent that the information provided is accurate or up-to-date as laws and regulations are always changing. If you have an issue that requires professional help, you should contact the appropriate professional to help you on your specific set of facts. Please read the Terms and Conditions for additional information.

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