States calculate unemployment benefits based on your wages in previous quarters. Quarters are specific three-month time spans within a year. A full year has four quarters. The first quarter runs from January 1 through March 31. The second quarter runs from April 1 through June 30. The third quarter runs from July 1 through September 30, and the fourth quarter runs from October 1 through December 31.
States use your wages in previous quarters to determine the amount of your benefit. Your base period is the first four of the last five full quarters before you filed your unemployment claim. For example, if you lost your job on May 2, your base period is all four quarters of the previous year. While you must have income within the first four of the five previous quarters to qualify for unemployment benefits, the state will only use the two highest earning quarters when determining the amount of your benefit.
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The formula used to determine benefit amounts varies from state to state. However, many states add the two highest earning quarters together and divide by two to get an average of your earnings. Your average earnings are divided by 26 to determine your weekly benefit in many state. For example, if you earned $8,000 in your highest earning quarter and $6,000 in your second highest earning quarter, the state will divide $14,000 by two. The state divides the $7,000 average by 26 to calculate your benefit to be $269 per week.
States cap the maximum amount of unemployment benefits a person can receive. The cap amount varies from state to state, but the unemployed person can ask his local unemployment office what the cap is for his state. As a result of the cap, according to MSN money, claimants may receive as little as one-third of their normal wages.
If the claimant does not have enough earnings in his base period to qualify for unemployment in his state, the state may use earnings in the four full quarters prior to the claim to determine eligibility and benefit amount. Not all states allow this alternative method, and claimants must check with the unemployment department in their state to determine applicability.
- Connecticut Department of Labor: Filing an Unemployment Claim
- MSN Money; Can You Live on $330 a Week; February 2011
- National Employment Law Project; What is an "Alternative Base Period" and Why Does My State Need One?
- California Employment Development Department; Unemployment Insurance Program; December 2010