The Truth About Unemployment Compensation

Posted by Laura Robbins, Esq. on May 10, 2013 

One of life’s devastating events is often a job loss. Economic stability is shattered and you feel there’s no solution until you find another job. Filing for ‘Unemployment Compensation’ may not have crossed your mind because you did not think you would be eligible for it. However, this is a common misunderstanding the newly unemployed have. There are many instances where you might be eligible for Unemployment Compensation, and it’s important to know the facts before dismissing it as an economic option while you search for new employment. Below is vital information you should know about Unemployment Compensation:  

1.       Fired? You might still be able to collect Unemployment Compensation. Whether being fired is your fault or not, you may still be able to collect Unemployment Compensation. The key is whether or not you committed ‘willful misconduct’ which led to your termination from employment. ‘Willful misconduct’ is defined as “an act of wanton or willful disregard of the employer’s interests”.  One example of willful misconduct would be stealing your employer’s products while working. Another example would be deliberately breaking your employer’s rules. Willful misconduct is not present if, for example, you could not work as efficiently as your employer wanted, or you kept making unintentional mistakes. And remember, your employer needs to prove you committed ‘willful misconduct’ to render you ineligible for Unemployment Compensation benefits.  

2.       Starting your own business may make you ineligible for Unemployment Compensation benefits. Starting your own business may seem like a perfect solution to unemployment for some people. However, be aware that taking steps to start your own business will most likely affect your eligibility to receive Unemployment Compensation benefits. If you are found to have ‘taken steps’ to become self-employed, you cannot collect Unemployment Compensation. Taking steps towards becoming self-employed can be as simple as establishing a website for your new business or receiving a tax identification number for your business. Any step which can be construed as moving yourself towards self-employment can disqualify you for these benefits.

However, you won’t be disqualified if you are simply continuing a part-time, or ‘sideline’ business after losing your primary job. For example, if you owned a business selling customized handbags since before losing your primary job, you can still collect Unemployment Compensation benefits so long as the circumstances surrounding your primary job loss allow you to be eligible for these benefits. However, increasing your ‘sideline’ business to a full-time business, or substantially changing the amount of hours you devote to your business can render you ineligible for Unemployment Compensation benefits. The key is that you had your business before your job loss, you don’t increase your business, you are still available for employment, and your ‘sideline’ business is not your main source of income.

3.       Voluntarily leaving your employment is not necessarily a bar to receiving Unemployment Compensation.  In certain instances, you can still receive Unemployment Compensation after voluntarily leaving your employment. You would need to demonstrate that you left your job due to ‘necessitous and compelling circumstances’. Examples of such circumstances include, but are not limited to, having your medical benefits eliminated or receiving a substantial reduction in your hours of pay. A ‘necessitous and compelling reason’ would not include disliking your boss or wanting to move to a sunnier area of the United States, as two examples.

        Thus, if you have suffered a job loss, don’t automatically pass over filing for Unemployment Compensation benefits. You may be entitled to these benefits, and they can offer you economic stability while you search for your next job.

This article is not intended to provide legal advice to any specific legal situation.

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