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Patrick, Esq.
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If you work full time for a company and have an LLC which you

Resolved Question:

If you work full time for a company and have an LLC which you work part time and you are fired by the full time Co. can you collect unemployment. Being fired did not have anything to do with the LLC.
Submitted: 1 year ago.
Category: California Employment Law
Expert:  Patrick, Esq. replied 1 year ago.
Hello and thank you for entrusting me to answer your question.

Unemployment Insurance Code section 1300, which dubs itself the "Self Employment Assistance Program" (or SEAP), addresses your concern. That sections states...

"The Legislature finds that the traditional system of unemployment compensation is primarily designed to provide income support for workers who are temporarily laid off or expect to be unemployed for only a short time. However, increasing numbers of workers are losing their jobs permanently due to rapid technological change, elimination of trade barriers, and similar causes. These workers need additional tools besides the basic income maintenance provided by the unemployment compensation system in order to reenter the workforce. For some of those workers, access to a self-employment program would be the best path for them to do so. Accordingly, it is the purpose of this article to authorize the payment of unemployment compensation benefits, and to provide appropriate training and support services, for eligible dislocated workers who wish to become self-employed in their transition back into the workforce."

However, this is a very complex and potentially hazardous ground to be treading. This is because, as you know, you must be "actively seeking work" in order to continue being eligible to receive benefits, and individuals who are conducting their own business have arguably already "found work" in conducting their own enterprise.

Furthermore, it is hazardous ground in your particular instance because this is not a business you are starting subsequent to your layoff--it is a business that you have already established. The policy behind section 1300 is to encourage people to go out on their own after being fired, and that policy is not well served in the present instance, making applicability of section 1300 somewhat questionable.

According to the EDD, a self-employed person remains "unemployed" for the purposes of eligibility for benefits as long as the person has not entirely withdrawn from the labor market. As long as you can demontrate that your consulting company is not a replacement for seeking work, but rather a supplement that aids you during your active search for work, you will have a reasonable argument that, pursuant to section 1300 et seq., you are eligible for benefits.

Also keep in mind that all self-employment income must be reported to the EDD pursuant to UI Code section 1279(c). If your income exceeds the benefit amount you would be entitled to, you will no longer be eligible for benefits. Also, your UI entitlement will be reduced by however much money you make through self employment.

To summarize, you remain "unemployed" if you are self-employed, as along as you are "able and available" to accept new employment and can demonstrate that your new enterprise has not become a substitute for finding work. You must report all self employment income, and you benefits will be reduced by that amount.

Please do not hesitate to let me know if you have any questions or concerns regarding the above and I will be more than happy to assist you further.

If you do not require any further assistance, I would be most grateful if you would remember to provide my service a positive rating, as this is the only way I will receive credit for assisting you.

Finally, please bear in mind that none of the above constitutes legal advice nor is any attorney client relationship created between us.

Very best wishes and happy holidays to you.
Patrick, Esq., Lawyer
Satisfied Customers: 6697
Experience: Significant experience in all areas of employment law.
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