What Happens if You Get a Job While on Unemployment?

If you're struggling to make ends meet without a job, unemployment benefits can feel like a lifeline. They're also meant to be temporary, which is why you're often job hunting while you collect them.

So what happens when you land one? Full-time work ends your benefits the week you start, not the week your first paycheck arrives. Part-time or gig work usually just reduces them. Reporting it correctly is what keeps an overpayment notice from showing up months later.

What happens if you get a job while on unemployment?

If you start working while receiving unemployment, your benefits will be reduced or stopped depending on the type of job, how much you’re earning, and your total hours worked.

Full-time employment

This is usually the simplest scenario. Generally, unemployment benefits end once you return to full-time work, though you may be able to file for the week you start.

Note that eligibility is tied to the week you start working, not the date of your first paycheck. You stop filing weekly certifications as of the week you begin full-time work.

It might sound unfair: Depending on the pay cycle, it may be a week or two before you see a cent from your new job. However, unemployment income is intended to offer temporary support to people trying to find work. Once you start working full time, you’re no longer unemployed or looking for work.

Part-time employment

Even if you’re looking for a full-time job, part-time employment is better than having no job at all. But because “part time” work can involve as little as a few hours per week, your unemployment benefits may not stop automatically.

Most states handle this with a partial benefit formula. They disregard a set amount of your weekly earnings, and subtract only the rest from your weekly benefit amount. This “earnings disregard” varies by state, from a few dollars to half your gross wages.

Once your earnings in a week exceed your weekly benefit amount plus your state’s earnings disregard, you typically won’t receive a benefit payment for that week. Check your state’s unemployment website to learn how part-time work affects benefits where you live.

Freelance or gig work

Driving for a rideshare company, completing a one-off project on a freelance marketplace, and other kinds of freelance and gig work may help reduce the burden of unemployment. However, they may also reduce your benefits.

In most states, income from freelance or gig work is treated similarly to income from a part-time job. If you work more than a certain number of hours or exceed an earnings threshold, your benefits could be lowered or discontinued.

Because you don’t have an employer tracking hours and income for you, keep track of the hours you spend on freelance work and your gross income, or what you make before expenses and taxes.

Do you have to report new income to your state?

Yes. And in most states, income is reported based on the day you earned it, not the day your employer pays you.

New income isn’t the only thing you need to report. Most states require you to complete weekly or biweekly certification after you initially claim unemployment, and you may need to report:

• Pre-tax income you’ve earned since the last reporting period
• Job offers you received
• Job offers you refused
• Whether you started school or training
• Whether you started receiving another kind of income, like Social Security

You also typically need to certify that you were willing and able to work every day since your last certification. Some states also require you to report your job search activities.

What happens if you don't report new employment?

Working while on unemployment and not reporting your income can be considered unemployment insurance fraud under federal guidelines from the U.S. Department of Labor.

Depending on the circumstances, unemployment insurance fraud may be treated as a misdemeanor or felony. In many states, a conviction could mean losing eligibility for unemployment insurance benefits, among other penalties.

States can usually set their own penalties for fraud, but every state must recover the fraudulent benefits and charge an additional penalty of at least 15% of the fraudulent payment. The state agency can also determine whether to pursue criminal charges.

If you have concerns about your specific situation, consider speaking with a licensed attorney.

‍When in doubt, report it. Working while collecting benefits and not reporting the income is unemployment insurance fraud, according to the U.S. Department of Labor, regardless of whether you meant to omit it. Ask your state unemployment agency if you're unsure.

What to do when you start a new job while collecting unemployment

Most states offer a way to end or adjust your unemployment benefits after you start a new job. The process depends on your state but follows general guidelines relating to when and how much you’re required to report.

Report your job or stop filing claims (full-time work)

If you’ve started working full time, you can end your unemployment claim by stopping certifications. If your job’s start date is in the middle of the week, you might be able to claim partial benefits for that week.

Report total earnings and hours worked (part-time or freelance)

When you fill out your weekly or biweekly certification for unemployment benefits, make sure to accurately report payment earned on each day of the week, your total hours worked, or both. Your state’s online system should make any necessary adjustments to your payments.

Bottom line

If you’re on unemployment and land a full-time job, report it on the week you work, not the week you're paid. Most states count earnings for the week you earn them, so the overlap between your start date and your last claim is exactly where overpayments come from. Depending on what you earn, your benefit may drop to a partial payment or stop entirely. That's the outcome you want, compared with a repayment notice and penalties months from now.

While unemployment doesn’t show up on your credit report, what may be on it is what happened to your bills during your employment gap. You can't go back and fix the months when money was tight. But you can begin a new stretch of on-time payments, and your first paycheck from this job makes that possible. Kikoff’s Credit Account reports those payments to all three bureaus, and because there's no hard credit check to open one, a rough patch on your report won't keep you out. Plans start at $5 a month.