Refusing a Job While on Unemployment

During 2020 and the early months of 2021, more Americans than ever requested unemployment insurance benefits due to the COVID-19 pandemic. Now that businesses are opening back up, many Americans are wondering how to transition off of unemployment benefits as they look to re-enter the workplace.

Unfortunately, many of those currently looking for work are getting job offers for less money than they were making before the pandemic. In some cases, these jobs offer only part-time work. Even many offers for full-time work pay less than what people are receiving in unemployment compensation.

So what happens when you refuse a job while on unemployment? Well, if you don’t have good cause, you can lose your unemployment benefits and be disqualified for future eligibility. If you also lie about your situation, the consequences could be even worse.

How Does Unemployment Work?

Unemployment insurance provides income to people who previously worked but are now not working through no fault of their own. People who lose their jobs in this way can apply for unemployment benefits by filing an unemployment claim with their state’s department of labor.

People who apply for unemployment compensation are called claimants. Claimants receiving unemployment insurance benefits—sometimes called UI benefits—can use these benefits for housing, food, and other costs.

There are many reasons why someone might be receiving unemployment benefits. It could be that the company that they worked for went out of business or downsized or an employee’s job was considered redundant.

Unemployment Insurance Eligibility

Claimants typically qualify for unemployment insurance benefits if they lost their full-time or part-time jobs for reasons outside of their control. 

Generally, people who quit their job willingly are not eligible to receive unemployment benefits unless they were employed in a hostile workplace, their job was unsafe, or they were constructively dismissed. People who were fired from their job for a valid reason are also not eligible for benefits. These distinctions are ultimately determined by state-level employment laws.

Unemployment insurance is not intended to be a long-term solution and claimants can exhaust their unemployment benefits if their length of unemployment exceeds their maximum timeframe to collect benefits. Those who are eligible are meant to receive unemployment benefits temporarily while they search for a new job. 

If a claimant loses their full-time job and then obtains part-time work, they may still be able to get unemployment compensation to fill the gap. However, their new employment earnings will result in a reduction of their weekly benefit amount.

Who Pays for Unemployment Insurance?

Unemployment insurance programs exist at the state level and their processes and procedures are generally governed by state law. However, they’re funded by the state and federal government, as well as businesses that purchase unemployment insurance.

COVID-19 & Unemployment

Unemployment claims skyrocketed when businesses and schools closed down due to the coronavirus outbreak. Right now, the pandemic is one of the biggest reasons Americans are receiving unemployment benefits. Many people had to leave the workforce to provide childcare while daycares were closed and schools were online-only. Although schools and businesses are slowly opening back up, restrictions and challenges related to the pandemic remain in many parts of the United States.

Congress passed the CARES Act to help Americans through the pandemic, including those who either lost their jobs or were placed on furlough. This law and others increased unemployment benefits and made them more widely available by eliminating or minimizing certain requirements, including those concerning the need to seek work actively while receiving unemployment benefits. With that said, many of the relaxed restrictions are expiring now that the country is opening back up in earnest. It is important to obtain current information about eligibility requirements in your state when applying for unemployment benefits. 

Although claimants will still need to file their claims with their local unemployment office, the U.S. Department of Labor (DOL) has put together a helpful guide and FAQ for claimants seeking more information about the CARES Act and how it relates to COVID-19 unemployment benefits at this time.

Maintaining Eligibility for Unemployment

Although eligibility for unemployment benefits varies from state to state, there are some general requirements that you'll have to meet to maintain eligibility for unemployment benefits. First, you’ll likely have to file a certification each week or every other week, confirming that you’re still unemployed.

Second, you’ll probably need to actively look for work while receiving unemployment benefits. This process is typically called a work search, and in many states it has to be documented by the person receiving unemployment benefits. Work searches must contain contact information for the employers that you contacted each week. 

In some states, work searches are only valid if you actually applied to an open job. You can search websites like LinkedIn or Indeed to find and apply to open jobs. Just contacting employers to ask if they have a job opening won’t cut it. Nor will submitting resumes to companies that aren’t actively hiring. The work search document is usually completed as a part of the weekly claims process.

Your state unemployment agency may audit your job searches and contact the employers you said that you contacted to confirm that you actually spoke with them. This is one of the ways that the state can find out if you have either refused a job or that you’re not actually looking for work. 

Refusing Work While on Unemployment

As part of your regular certification process, at minimum, you’ll need to state that you did not refuse a suitable job during the time period in question. Suitability generally refers to work that is in line with your professional background, is safe and legal for you to perform, and has a similar salary to your previous career or one that’s appropriate to the local job market.

If you refuse suitable employment while on unemployment, you will need to show good cause as to why you can’t work for the employer that offered you the position. Generally, good cause includes:

• You are the primary caregiver for children who are not in school due to COVID-19.

• The hours are substantially different from previous positions you’ve held.

• The employer doesn’t have the necessary licenses to operate in the field.

• The employer doesn’t carry appropriate workers’ compensation insurance.

Refusing to return to work because you earn more money while on unemployment does not constitute “good cause” to turn down a job offer. 

Penalties for Refusing Suitable Work

Each state has its own penalties for refusing to work while on unemployment. However, regardless of what state you live in, penalties will be significantly higher and more serious if you’re found guilty of unemployment insurance fraud. If you’re convicted of fraud, you may face criminal charges, jail time, and/or fines. 

For example, in the District of Columbia, penalties include criminal prosecution, forfeiture of future tax returns, and ineligibility for future unemployment insurance coverage. California’s Employment Development Department states that an unemployment insurance claimant can lose future eligibility for refusing work. If a claimant is found guilty of fraud, they may face penalties and be disqualified from benefits for 5-23 weeks. Illinois has similar penalties and also has no clear definition of good cause, which makes refusal work cases highly contested. Illinois’ fraud penalties are also more severe than many other states’ penalties are.

How Can They Find Out if I Refused a Job Offer?

Unemployment offices discover that claimants have refused work while conducting an audit. They can also find out from employers who offered jobs to individuals receiving benefits. Note that if you were furloughed and your employer offers you your job back but you refuse to accept it, your employer can report your refusal to return to work to the local unemployment office.

So, before you make any decisions about whether to accept a job offer, check with your state’s department of labor to make sure you understand what good cause means in your state. Make sure you’re aware of the consequences of refusing to work as well. If you ultimately decide to turn down a job offer for good cause while on unemployment, you may need to file additional paperwork explaining why you refused the job.

Let’s Summarize...

Unemployment insurance is meant to help people stay on their feet temporarily when they are out of work through no fault of their own. Although the additional unemployment benefits provided by recent legislation give greater leeway to people who are out of work due to the pandemic, you should still know what’s expected of you if you are collecting benefits.

No matter what, do not lie to the unemployment office about your work situation. This is fraud and could result in criminal penalties.