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Illegal Taxpayer-Subsidized Vacations


Unemployment insurance exists to help people who lose their jobs through no fault of their own. It is neither severance pay nor paid vacation.

(Photo Credit: Moyan Brenn/Flickr)

An eye-popping conversation at CBS MoneyWatch starts with an employee asking the Evil HR Lady how to finagle quitting and collecting unemployment insurance to extend her time off before starting a new job. Good thing for the writer that she gets to remain anonymous. She is asking for help committing fraud.

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Unemployment Benefits

The federal Department of Labor website explains in clear and easy to understand terms: “The Department of Labor’s Unemployment Insurance (UI) programs provide unemployment benefits to eligible workers who become unemployed through no fault of their own, and meet certain other eligibility requirements.”

Unemployment benefits are a safety net for workers who are, for example, downsized. Employers and employees both pay a tax to help fund unemployment benefits for those who need them and are eligible to receive them.


Unfortunately, federal and state governments use up resources tracking down improper payments to ineligible recipients. Not all improper payments are the result of fraud, and some improper payments are recovered. It takes time and money to track down improper and fraudulent payments, decide whether to recover or waive the payments, and go about attempting to recover payments. Sometimes recovery efforts are successful, sometimes they are not.

You can see how your state is doing by clicking on your state at the Department of Labor’s State List.

Fired for Cause

The anonymous writer wanted to make a deal with her employer that she would work for another five months, then be fired for no cause when she really wanted to quit. If she were fired for cause, she would be ineligible to receive unemployment benefits. “Cause” means you did something wrong and you were fired because of your mistakes, inadequacies, or inability to do your job well.

If you quit your job, then you have not left your job “through no fault of your own.” You choose to quit, you don’t get unemployment benefits.

If your employer downsizes or has to let you go but you have done nothing wrong, you are probably eligible for unemployment benefits.

Quitting Your Job

Evil HR Lady does mention the possible scenarios in which negotiating termination and unemployment benefits may be appropriate:

“That is not to say there aren’t times and place to negotiate an exit that will allow you to receive unemployment — there certainly are. For instance, if you were on the verge of being fired, or if your boss was causing you extreme psychological or physical trauma and you needed out of that job immediately for your own well-being.”

Outside of that, if you are planning on taking time off, save your money in anticipation of doing so.

Tell Us What You Think

Have you ever or do you know somebody who needed unemployment benefits? Leave us a comment or join the conversation on Twitter.

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