Can an Active Employee Collect Underemployment Benefits?

hands-460872_1280In most states, in order to collect unemployment benefits a worker must be either unemployed or underemployed. An unemployed worker has no earnings in a week; an underemployed worker is one who has some earnings in a week but is still entitled to some unemployment benefits for that week either due to a reduction in hours worked or a reduction in pay rate.

However, a person who is working full time in a week is not unemployed or underemployed and therefore cannot receive unemployment benefits for that week unless their regular wages have been reduced.

If you receive an unemployment claim for an active employee that has been consistently working full time and has not had a reduction in pay, a response should be sent in to the unemployment agency notifying them of the full time status and proof of hours worked.

It is possible that an employee is temporarily working a reduced number of hours, either due to the needs of the business or by the employee’s choice.  If the employee requests a reduction in hours, it is important to get the request in writing for documentation in the event of an unemployment claim.  If the worker turned down work offered they would receive either a reduced benefit payment or no benefit payment at all for that time period.

If the unemployed worker does not tell UIA about the actual earnings, or offered work, for a week, and benefits are overpaid for the week, repayment (restitution) will be required, and fraud penalties will be imposed if it is determined that the unemployed worker intentionally failed to tell UIA about the earnings.

Note: Unemployment laws vary by state.  The information provided above is based on Michigan Unemployment law.


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