Involuntary furloughs are coming. As we start talking today about one of our country’s social protection systems, unemployment insurance, let me lead with 3 very important points.

• First, unemployment insurance varies GREATLY by state, there is no national standard.
• Second, if you don’t qualify for unemployment by your state’s standards, you can’t get CARES Act (eg the +$600/week) supplements to the insurance.
• And finally, the rules are changing, quickly.

Because of that last one, I want to make sure you remember the information here is current as of when I’m posting it, but it may quickly no longer be.

How much is Minnesota unemployment worth, to those of us in the Rochester and Olmsted County area? About 50% of your “average weekly wage”, and that amount is capped at $740/week.

Other tips on being furloughed, courtesy of the Minnesota Unemployment Insurance (UI) Program:

• Usually there’s a first unpaid week. That’s not currently the case.
• You can only claim MN unemployment insurance if you are working <32 hours per week.
  • Implication – if your employer gives you a pay cut, and then cuts you back to 4 days a week on top of that, you’ve had a probably >25% pay cut and zero eligibility for state or federal unemployment benefits. You’re far better off with a schedule that is 3 weeks on, 1 week off, if you have any negotiation room.
  • Also note that many other states don’t have a 32 hour rule, but many also have a much lower maximum benefit per week.
• That federal extra $600/week is only available if you were already eligible for unemployment according to your state’s requirements.
• File for benefits immediately. There is no backdating of paperwork, so filing late is losing money. This is an extra challenge when the state system is so swamped you can’t get through, as is the case in many places across the country.

So what does that mean in real numbers? For your specific situation, go use the “Estimate Your Benefits” tool from the State of Minnesota (or your own appropriate state, of course). But in general, if you had been making up to $70k/year, your weekly benefits after unemployment insurance payments likely work out similarly after the extra $600/week. If you had been making $150k or more per year, that capped benefit amount (even after federal boost) would likely be a painful change.

After the end of the year, you’ll receive tax form 1099-G, and need to include that information when filing your income taxes. Yes, unemployment insurance is taxable for the purposes of federal and state income tax, but not Social Security or Medicare. And if you aren’t having tax money withheld from those checks, you’ll need to make it up via estimated quarterly tax payments, or higher withholding while you’re employed, or else you’re going to have a big tax bill next tax season (possibly with penalties).

There are three more aspects of eligibility that I want to make sure I address.

A brief side trip into the land of the self-employed. Unemployment insurance gets awkward when you have self-employment, whether that’s a couple hundred dollars a year in book royalties, a small side hustle, or you drive for a ride-share service. That’s because in the eyes of unemployment, a self-employed person who is “unemployed” is just, to be ungraceful about it, being lazy. That massage therapist should just go beat the bushes and give more massages, then they’d earn more money. It doesn’t seem entirely fair for the system to work that way, especially when entire industries are currently collapsed, but that’s how the system is built. The CARES Act is supposed to address this, but getting states to work through the process hasn’t been going smoothly in many places.

Unfortunately not even all employees are eligible for unemployment insurance. Many nonprofits, especially churches, are able to opt-out of paying into the unemployment insurance system in their state; but that then means their employees aren’t eligible to claim benefits. And often those employees aren’t even aware, and are caught flat-footed when a bad situation arises.

Finally, also about eligibility, the reason you’re unemployed matters. You have to be unemployed through no fault of your own. That means you can’t have filed paperwork with HR to quit Company A, because you were going to start a new job elsewhere at Company B, and then that B job fell through due to retracted offers from COVID19 related budget cuts. It also means you can’t have been fired (in many scenarios) – and if you work for an essential service business, that may mean you’re ordered to do work that’s not anything like your normal (and may involve a risk of infection exposure you never contemplated); but if you refuse, your employer likely can and will fire you, and you likely can’t receive unemployment benefits at that point.

On that cheery note, take care out there. Deep breath, knowledge is power, focus on what you can control, and give the loved ones you’re sheltering with a hug.