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Joseph, Lawyer
Category: California Employment Law
Satisfied Customers: 5299
Experience:  Extensive experience representing employees and management
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I have a question about CA LLC and unemployment insurance claims:

This answer was rated:

I have a question about CA LLC and unemployment insurance claims:
We need to address the following three cases
(1) LLC member (paid as owner draw files K1)
(2) part-time employee (W2)
(3) contractor (paid as 1099)

In addition, throughout the relationship with the LLC , each person also had other contract work (1099s).

Each is no longer with the company due to no work available.

Q1: Are they all eligible for unemployment insurance benefits as they are no longer with the LLC and no longer have outside contract work.?
Q2: Are there any differences between how they file for unemployment claims (assuming eligible)?

My name isXXXXX am a licensed attorney, and my goal is to provide you with excellent service today.

Actually, only the part time employee is eligible to receive unemployment benefits. (co)owners of LLCs and independent contractors do not have unemployment insurance deducted from their pay and do not pay into the California unemployment insurance system, so they are not eligible for unemployment benefits.

Only employees who are paid as W2 employees have unemployment insurance payments deducted from their pay and are eligible to apply. So, only the part-time employee can receive unemployment insurance.

I hope the above information is helpful.

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Customer: replied 3 years ago.


So: clarification:


First: employees do not have UI deducted from their pay. the LLC pays approx 3.4%. But it is true that the LLC does not pay 3.4% of any 1099 or member draw.



So is the following correct:

If my sole income comes through contract work (1099) or as a member of LLC (K1) - I will never be able to make an unemployment claim.



The LLC pays into the UI pool but I suppose the reason is that the amount is based on employee wages (w2) and therefore does not apply to anything else except W2.

Yes, unfortunately, that is correct.

Only employees who were paid as W2 are entitled to receive unemployment benefits, not members of the LLC who were only paid by K1, and did not receive a salary as a W2 employee.
Customer: replied 3 years ago.

to beat this one to death:


Joseph has been a partner at Joe's Law Firm, LLP since its inception. He will never be entitled to unemployment benefits.


Don't get fired Joe. In this case would you get unemployment insurance on your own?



Yes, in this instance, there's no opportunity for Joseph to receive unemployment benefits.

The only time self-employed people or those who are members of an LLC may be eligible to receive unemployment benefits is if they pay themselves a salary (or receive one from the LLC) as W2 earnings. If not, there is unfortunately no basis for them to receive unemployment benefits.

You cannot actually obtain unemployment insurance on your own (at least that I know of, perhaps there is some private company that offers this that I haven't heard of). It is only available through the state and only for employees.
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