Unemployment Benefits - Partial Benefits

If a former employee is claiming benefits against the employer, such a claim can be monetarily reduced by whatever amount of temporary or part-time work the claimant might engage in during his layoff or other type of unemployment period. Thus, if some temporary help is required for a job, it may be advantageous to review the unemployment claims to see if there are any claimants currently drawing benefits who could be called back to work.

In most states the weekly benefit amount payable to a claimant will be reduced by the amount of his part-time earnings. Usually a specified amount of the part-time earnings is disregarded or deducted before the reduction of the weekly benefit amount is made in order to give the claimant an incentive to work. Most state laws provide for rounding the weekly benefit amount to the next highest amount in a partial unemployment situation, this reduction will apply whether it is the former employer or any other employer form whom the earnings have been received.

Should a worker be laid off for part of a week or has work hours reduced, he will be deemed to be partially unemployed and eligible to draw benefits in an amount according to the reduction. A test for whether a claimant is partially unemployed or not is not in terms of hours worked in a week but in terms of wages earned.

In a case where, for example, workers were paid minimum wage and the employer customarily finds it necessary to lay off one-half of the workers because of seasonal slack, it may now be seen that, insofar as controlling unemployment costs, it would be better to lay off absolutely no one but, instead, reduce every worker's hours by one-half. Therefore, instead of laying off one worker for every one employed at 40 hours, each worker would be reduced to 20 hours per week. Those wages would not be less than the weekly benefit amount so that no one would draw benefits. The employer is paying out the exact same amount in wages but absolutely none in unemployment benefits which, depending on the size of the workforce, could be a substantial savings.

Things are not always as simple and convenient as they could be. The above example only works in states that have a "less-than-weekly benefit-amount" definition of partial unemployment and a 50 % formula for computing the weekly benefit amount (1/26 times the high quarter of wages). Not all states use the 50 % formula and not all states define unemployment as earning less than the weekly benefit amount. Full unemployment is defined in many states as any week when a worker earns less than his normal weekly benefit amount increased by a small sum (such as $10). The states vary as to the amount of weekly earnings necessary to be deemed fully employed.

Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.