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  1. #1

    Default Unemployment Benefits for Independent Contractors

    My question involves independent contractors in the state of: Ohio

    I was told today I'd be let go next month due to the website I'm working for cutting its budget. They are happy with me, but can't afford to pay me due to a lack of revenue and work. My contract with them is work for hire as an independent contractor. My research online tells me I'm not eligible to draw unemployment, due to my status as a non-employee (the site is operated in another state and I always work from home). But I was not my own boss, I had an on-call schedule I was given and required to follow and I had assignments/guidelines dictated from the owner above me. I've read that this might be a misclassification in my status and with that circumstance, I still might be eligible (regardless of the contract I was working under). Is that true and do I have any right to benefits at all?

  2. #2
    Join Date
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    Default Re: Unemployment Benefits for Independent Contractors

    It might be a misclassification but I certainly wouldn't count on it.

    Did you have a W2 job prior to this? If so what were your dates of employment on the current and past job? Also why did you leave the W2 job?

  3. #3
    Join Date
    Mar 2012
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    Default Re: Unemployment Benefits for Independent Contractors

    To get a better answer, did you work this "job" for the past 18 months? If not, what's your work history?

    Quote Quoting isitlegalmk
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    I still might be eligible (regardless of the contract I was working under). Is that true
    Yes. If you were misclassified as a 1099 worker, but were really a w2 worker, then you can get your "wages" reclassified, and receive UI benefits.

    Quote Quoting isitlegalmk
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    and do I have any right to benefits at all?
    Only people that work in covered employment and lose their job for a correct reason get UI.

    When you get canned, just apply, and tell the UI people you were misclassified when you get your award letter showing that you have no money in any of the quarters used as part of a monetary appeal (the appeal instructions are on the award letter). If you happen to get a call for a phone interview, you can raise the issue on the call as well.

    Save your money though. These things can take a while. The shortest reclassification I've read about is 6 weeks (your benefits will be in limbo, but you'll receive UI for all weeks you are eligible and which you submit claim forms if things are decided in your favor). The longest was 6 months (ouch).

    While you are still working, start gathering your pay data. The state is going to want to see copies of "pay stubs" or "checks" with dollar amounts by date. They might even be willing to work with bank statements showing regular deposits that look like pay checks. The UI people will try to recreate a base period for you based on this information. You can be pretty sure that your "employer" won't want to help you do this, so be sneaky about it.

  4. #4
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    Jan 2015
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    Default Re: Unemployment Benefits for Independent Contractors

    There is a conflict of interest going on here between the employer who was classifying you, perhaps incorrectly as an independent contractor and both the state and federal employment systems, which have lots of interest in the correct classification of employees. This will involve their (required if you are a regular employee) state employer taxes as well as their responsibilities to the IRS system.

    In many cases, employers think they're being smart to do this, classify you as a contractor, but it's rarely a good idea to let them do this unless you are truly an independent contractor, which means many things including that you set your own work hours, arrange your own schedules, etc.

    You go on and file a claim for benefits, providing the system with the information about the company and the duration of time you've worked for them, where they're based, etc. and see what boils down out of this. It costs nothing to file a claim, there is no down side to doing so. Expect that in the beginning you'll be told you are not "monetarily eligible" to file a claim. You will need to appeal this monetary decision, stating that you were misclassified as an independent contractor when you were in fact a regular employee. From there, the issue will go on to the unemployment tax system and will be resolved there.

    Such a disagreement between the unemployment system and this employer may allow you to be paid unemployment benefits even before they get it established that this employer has incorrectly categorized all their employees, or before they've collected any employer taxes from this employer, because any benefits you will be paid would be paid from the general unemployment pool, and then they'll later spend quality time collecting what's owed to the system from this employer. So maybe it won't be quite as long as you have been led to believe. Any claim for unemployment benefits is going to take about six to eight weeks to process before you receive your first pay. File immediately, though, you have nothing to lose and possibly something to gain. But you cannot be backpaid for weeks since you lost the job unless you've filed that claim and been certifying for the weeks that have passed.

    File the claim, let them tell you what they'd need if you have them, keep making your certifications for weeks as they pass, and you'll perhaps find that you were eligible to draw benefits after all, though true independent contractors are not.

  5. #5

    Default Re: Unemployment Benefits for Independent Contractors

    Thanks for all the great info by everyone. I will just go ahead and take the threads advice and file the claim. However, two more questions I have on my mind:

    First, if the site owner is still offering me work, but much less of it at a reduced salary, would that be seen as me walking away from work (thus disqualifying me). Let me reiterate it is 1/5th of my income and impossible for me to live on if I stay with what he's offering now.

    Second, if I do stay on at the reduced rate temporarily (just to suffer through and pay my bills for the next few months until something else comes along), would I still be able to file unemployment and then resign once the benefits start?

  6. #6
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    Jan 2015
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    Default Re: Unemployment Benefits for Independent Contractors

    Okay, once you have filed the claim, having quit the job due to being offered a huge reduction in salary, etc. you can file for unemployment benefits, go into the sevens and sixes of trying to figure out if you're misclassified, if there are benefits forthcoming, etc. filing appeals and all that is involved. You cannot, except under very limited circumstances, file a claim, keep working, and later start receiving benefits after you've gone through the approval process.

    There is ANOTHER alternative for you though. And that is that you keep working, at the greatly reduced rate (which will, incidentally, very likely eliminate your likelihood of qualifying for unemployment benefits in this situation, even partial benefits) and start looking like crazy for another job. At the point you find one you leave this absolutely little pitiful 1/15th of your income.

    Unemployment benefits are not much money. They last a maximum of 26 weeks in the best of all possible situations. It takes, as we pointed out, a really long time to start the benefits. You have to file the claim, and THEN wait until the claim is filed and adjudicated and re appealed, etc. in other words, weeks, if not several months before you get the benefits started.

    It is not possible to continue working until you are approved for the claim, and qualify for those weeks of benefits unless the gross amount you are making at the new rate PER WEEK (regardless of how or when paid) is less than your weekly benefit amount would be in unemployment insurance (which under the present situation, would be hard to determine, except that we know it will be your state's weekly max or less).

    Your other option is keep working there, start looking like crazy for something else, and then when you've found it, quit working for this employer as you go to that next job. Skip the unemployment process all together. In many cases, that will be your best alternative. If you do elect to keep the job, and you work one minute at the new pay rate and in the new arrangements, then that becomes your job, by working at it, you have accepted both the conditions and the pay rate. If you then quit it, due to it being a reduction of some past salary that you no longer receive, you would not likely qualify for unemployment benefits, because your claim would not be based on anything except your pay rate and situation at the time you quit and apply for benefits.

  7. #7
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    Default Re: Unemployment Benefits for Independent Contractors

    Quote Quoting isitlegalmk
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    First, if the site owner is still offering me work, but much less of it at a reduced salary, would that be seen as me walking away from work (thus disqualifying me). Let me reiterate it is 1/5th of my income and impossible for me to live on if I stay with what he's offering now.
    Quitting because you can't live on what they are paying you is disqualifying, so don't say it that way. Quitting because your employer cuts your pay RATE is qualifying provided you do it right. Sure, you're waking away, but you'd be walking away for a reason that quite often qualifies people for UI. Get HELP before you do it this way, and do NOT work at the reduced pay rate.

    Quote Quoting isitlegalmk
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    Second, if I do stay on at the reduced rate temporarily (just to suffer through and pay my bills for the next few months until something else comes along), would I still be able to file unemployment and then resign once the benefits start?
    No, you can't do this. If you work the new, crappier job, that tells the world that "hey, I'm ok with this," because if you weren't, you'd have quit. You don't get apply for UI and hedge your bets, and then when it kicks in, you get to quit. That would quitting your job to get UI - disqualifying.

    When the job you have right now is over, then apply for the UI, and do NOT take crap work. Make sure you have plenty of money in the bank to wait out an adjudication or until you get your next job. If you don't care about the UI, then you can do the crap work while looking for something better. Either way, you need to save your money so you can get through this situation.

  8. #8

    Default Re: Unemployment Benefits for Independent Contractors

    Great info. Just one final question. I have a month before anything changes. Can I apply now, stating that after this month I'll be forced to leave due to a pay cut (as you stated it above)? Will that be enough time to get it processed and possibly appealed if needed?

  9. #9
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    Mar 2012
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    Default Re: Unemployment Benefits for Independent Contractors

    Quote Quoting isitlegalmk
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    Can I apply now, stating that after this month I'll be forced to leave due to a pay cut (as you stated it above)?
    No. Apply when you lose your job as it exists right this second.

    If you apply while you're working or on a leave of absence while you're still attached to an employer, it can have unpredictable results. If you were in CA, I know how it works, but I don't know what OH does. In CA, you'd get a notice of "invalid claim," OR the act of applying can be treated as a separation, and you'd be denied UI because you "quit" when there was still work left to do. The "good cause" for a quit does not arise until things CHANGE. If the job is the same and the money is the same, then you keep doing your job as you agreed to do. Only at the moment of the change do you get to start trying to quit, and even then, you get HELP before you walk out that door.

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