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Patrick, Esq.
Patrick, Esq., Lawyer
Category: California Employment Law
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Experience:  Significant experience in all areas of employment law.
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I was layed off in November of 2010. I filed for umemployment

Customer Question

I was layed off in November of 2010. I filed for umemployment compensation and have received payments throughout 2011. In addition to looking for employment in my industry, I started a home-based business unrelated to my usual employment which I engaged in during hours and on days (weekends) unrelated to my usual employment (M-F 8-5). Since I looked for work and was available, do I have an issue with receiving unemployment payments?
Submitted: 5 years ago.
Category: California Employment Law
Expert:  Patrick, Esq. replied 5 years ago.
Hello and thank you for entrusting me to answer your question.

I believe that Unemployment Insurance Code section 1300, which dubs itself the "Self Employment Assistance Program" (or SEAP), addresses your inquiry. 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 you must be "actively seeking work" in order to continue being eligible to receive benefits.

Accordingly, 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person remains "unemployed" for the purposes of eligibility for benefits, as long as the person has not entirely withdrawn from the labor market, i.e., determined that he/she is no longer available for employment. Furthermore, any self-employment income must be reported pursuant to UI Code section 1279(c). If your income exceeds the benefit amount you would be entitled to, you would no longer be eligible for benefits. Also, your UE entitlement will be reduced by however much money you make through self employment.

To summarize, you can conceivably remain "unemployed" for the purpose of obtaining UE benefits if you are self-employed, as along as you are "able and available" to accept new employment. You must report all self employment income, and you benefits will be reduced by that amount.

I sincerely hope that this information helps you and I wish you the very best of luck. Bear in mind that none of the above constitutes legal advice nor is any attorney client relationship created between us.

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