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Patrick, Esq.
Patrick, Esq., Lawyer
Category: California Employment Law
Satisfied Customers: 12801
Experience:  Significant experience in all areas of employment law.
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I have just received word that my company, a military contractor,

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I have just received word that my company, a military contractor, has lost the contract that I have been working under. Since my position is not transferable within the company, they will be terminating my employment for "lack of work," I am assuming. Is there any reason that I would not be able to collect unemployment?

It is a possibility that the company who is assuming the contract may contact the "incumbent" employees. If they decide not to offer me a job under the new contract, will this affect any unemployment I may be eligible for?
Good afternoon and thank you for entrusting me to answer your question. I am very sorry that you expect to be laid off.

In general, an individual in the state of California will be eligible to receive unemployment benefits provided that they have received enough wages during the base period to establish a claim (this is typically not a problem if you have been employed for longer than a few weeks), they are physically able and available to immediately accept work, actively seeking work, and unemployed through no fault of their own.

Being laid off because your company lost the contract under which you were working is practically the definition of becoming unemployed "through no fault of your own."

The only conceivable basis for denial of unemployment benefits would be if the company who is assuming the contract offers you a substantially equivalent position and you refuse it.

UI claimants always have an obligation to accept suitable work (otherwise, they are now unemployed "through fault of their own"), and so this could conceivably result in the denial of benefits.

However, as I understand your question, you are not worried about being offered a job by the new company and the consequences of turning it down, but the implications of NOT being offered a job at all. If you are simply not offered a job under the new contract by the new company, that would do nothing to jeapardize your unemployment benefits. You are still unemployed through no fault of your own, and so assuming you maintain your efforts to search for a new job and can assert that you are able to accept employment (i.e., you aren't going back to school full time and you haven't recently become disabled), you should have absolutely no trouble qualifying.

For information on how to file a claim for unemployment benefits with the EDD, visit this link:

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, please be so kind as to provide a positive rating of my service so that I may receive credit for assisting you. Very best wishes to you and thank you so much for coming to Just Answer.
Patrick, Esq. and other California Employment Law Specialists are ready to help you
Customer: replied 4 years ago.

Thank you for your very detailed answer. I have one more question in regards XXXXX XXXXX: If I am offered this position (basically, "my" position), at a substantially lower salary, and I decide not to accept, could this impact my receiving unemployment benefits?


Thank you very much for your reply.

UI claimants are only obligated to accept "suitable work." In regard to defining "suitable work," Unemployment Insurance Code Section 1258 states in relevant part:

"'Suitable employment' means work in the individual's usual occupation or for which he is reasonably fitted, regardless of whether it is subject to this division.

In determining whether the work is work for which the individual is reasonably fitted, the director shall consider the degree of risk involved to his health, safety, and morals, his physical fitness and prior training, his experience and prior earnings, his length of unemployment and prospects for securing local work in his customary occupation . . . . "

There is no hard line rule as to what constitutes a sufficiently lower rate of pay to make the offer of employment no longer "suitable." However, in P-B-310 (a published EDD decision regarding the denial of benefits) the administrative law judge presiding over that claimant's hearing determined that a 43% reduction from the employee's prior wages made the new offer of employment "unsuitable."

There are other EDD decisions in which judges found that reductions in an employee's pay as little as 20% gave them "good cause" to quit (on the theory the work was no longer suitable).

Based on these numbers, I'd say if the reduction in pay is more than 40%, you'd have a very strong argument the work is no longer suitable. If the reduction is less than 20%, you'd likely have to take the job, and if it falls somewhere in between 20-40, then you are in a real grey area where you are gambling your unemployment benefits if you turn down the position.

Again, please feel free to let me know if you have any further concerns. If I have answered your question, I would be very grateful for a positive rating of my service so that I may receive credit for assisting you.

Kindest regards.