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This didn't happen to me, but a friend, but I'm curious myself.

Note this is US-specific, as I understand unemployment insurance works differently in the US compared to other countries. My and my friend both live in WA state where I understand unemployment insurance is operated by the state government, but still considered private insurance, and so doesn't constitute any kind of welfare.

Said friend was fired for poor performance recently (I believe his manangement/HR was looking for excuses, but I digress). He only has a few weeks' expenses saved up (messey divorce) so I told him to apply for WA's generous unemployment scheme (it's like $600/week, tax free!), however he was hesitant.

His reasoning for not submitting the paperwork was his concern that a future potential employer would hire a background check company and they would somehow be able to find his unemployment claims and not move to make him an offer, deeming an unemployed new hire less valuable than someone already with a job looking to switch (he's trying to get a job ASAP so he can make it look like he's switching employers and hide the fact he was fired - his previous employer has a HR policy of never disclosing the reason someone was terminated or resigned).

(He isn't planning on lying or defrauding a future employer - he plans to just say that "he left the company to pursue new job leads" - but he's convinced if they knew he collected unemployment then they would write him off)

I told him not to worry and pointed him to WA's law on unemployment information confidentiality includes a $5000 penalty for unauthorised use of unemployment records - but the law isn't precise about what constitutes unauthorised use. The law does mention that inquiries for investigations are allowed - so would an ordinary background check then be able to include this information?

http://app.leg.wa.gov/RCW/default.aspx?cite=50.13

Is he being paranoid, or reasonable, in his suspicions and reservations?

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That's daft. The next person will say it's much better to be or look not employed, because looking for a job while employed clearly demonstrates that you are not loyal to your current employer and can't be trusted.

Having some money coming in means your friend won't be forced to take the first job that is offered, but can wait for a job that is more suitable and/or pays more.

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    Reminded me of the best corporate loyalty quote of all time: "Would I ever leave this company? Look, I'm all about loyalty. In fact, I feel like part of what I'm being paid for here is my loyalty. But if there were somewhere else that valued loyalty more highly, I'm going wherever they value loyalty the most." - Dwight, The Office (American version)
    – acpilot
    Jan 29, 2017 at 2:35
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No employer can know if a potential employee drew unemployment, as it is not public information. See the US Department of Labor website for more info.

The former company will know, but if they divulge that info it will open them up to liability.

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They may find out. So? They will find out the start and end-dates of his employment. I know of no companies that care if you collect unemployment. What they care is if you are currently employed, not currently employed, and how long you have not been employed...all of this is available to future employer.

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