Freelancers And Unemployment: Can You Swing It?

We had a reader ask us about unemployment benefits and freelancing:
“I [have] opportunities to freelance but have issues with unemployment benefits,” she asked. Any advice?

Collecting unemployment benefits and doing a little work on the side sounds like a great idea—after all, the state wants you to get back on your feet, right? But it can be tricky, as we’ve seen recently.

Here’s what the New York State Department Of Labor has to say about freelancing (your state may vary):

Substantial activity in preparing for commencement of business may indicate not only unavailability but also lack of total unemployment, even though the venture is abandoned before it becomes operative.

A claimant is engaged in self-employment and therefore ineligible for benefits because he is not totally unemployed within the meaning of that term as defined by Section 522 of the Law when he devotes substantial time to a business in which he has a proprietary interest.

A claimant who works in his own business (3 to 4 hours on each of 3 to 4 nights weekly) is self-employed and therefore not totally unemployed, and it is irrelevant that this work in his own business does not interfere with his seeking or accepting full-time employment for wages.

It is axiomatic that unemployment insurance benefits are to be paid only to the unemployed….

But the good news is that if you pick up a little bit of work, you can still receive some benefits—they’ll just be reduced. Here’s how that works:

If you earn over $405 in a week, you’ll receive no benefits for that week. If you work four days a week (even if your work for that day takes just a couple minutes), you’ll receive no benefits.

If you work one day: you’ll get 75% of your normal check
Two days: 50%
Three days: 25%
and four days: no check.

And listen: we are not attorneys or accountants here and this should not be construed as legal advice. Check with an expert familiar with your state’s unemployment laws. Don’t get burned like the Adsense blogger did.

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