Unemployment Compensation Manual

:: Other Disqualifying Factors ::



This section summarizes a few miscellaneous factors affecting eligibility for unemployment.
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To be eligible for unemployment compensation benefits, a claimant must be unemployed. This stipulation may seem more obvious than it turns out to be. For example, if a worker owns a business "on the side", is he unemployed? If a full-time worker has a part time job to supplement his income, and loses his full-time job, is he unemployed? If a worker has an intermittent job where he is "on-call", is he unemployed during those times when he is not called?

Strict Definition:
For an individual to be unemployed, he must perform no services and he must be receive no remuneration. An example might be a worker who had but one job, no businesses on the side, got laid off, got no pay, did not work at all.

Conversely, if an individual performs any service or receives any remuneration, he is not unemployed. An example might be a worker who, while laid off, helped out his mother at her store in return for cash "under the table".

On the other hand, if a worker meets the above conditions, but his employment relationship with his employer has not been officially terminated, he is still unemployed for purposes of unemployment benefits. For instance, if a worker is laid off for a stated period of six weeks while the plant retools, but he still has a job in the sense that he knows that, after retooling, he will be back at work, then he is unemployed for those six weeks.

On Call:
A worker on call does not perform services nor does he receive remuneration until called. He is unemployed between calls. An example might be a visiting nurse between assignments. She is unemployed. She waits for pay and work.
On Standby:
A worker on standby has agreed with his employer to remain available to that employer in return for remuneration. An example might be a repairman. He is paid to wait, and waiting is part of his work.
Self-employment is not unemployment, regardless whether the person is earning or not. Part of the job of self-employment is finding new business, and so a self-employed person should still be working while in-between earnings. he should be working at getting work.

Incidental self-employment which does not interfere with a personís availability and search for work may not disqualify a claimant. For example, if a woman sells Tupperware now and then in the evenings, she might still collect unemployment. But in any case where self-employment is the claimantís primary employment, or where it interferes with his availability for work and search for work, he is not unemployed.

Independent Contractor:
Very frequently, employers will claim that certain workers are independent contractors on whom the employer should pay no unemployment taxes. These putative "independent contractors" may range from masons to ecdesiasts. The claims may be based upon everything from a handshake to formal, signed employment contracts. The issue may have come to light because of a claim or because of an audit. regardless, the outcome is nearly always the same. Time and again, the state agencies eventually demand the employers pay those dodged taxes, despite the employers claims that the workers are independent contractors. Time and again, the employers take the issue to court. Almost every single time, the employer loses. Rules determining who is or isn't an independent contractor are complicated, subjective, and conflicting. The state, arbiter of the rules, is determined to collect the tax, which the "independent contractor" has almost never paid. The money is more easily collected from the employer. The state will be sure to do so.

If, indeed, the worker is an independent contractor, then he is self-employed and not eligible for unemployment. But the requirements must all be met. Merely asserting that he is independent, or signing an agreement with him which says so, will not do the trick.

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A worker, to be eligible for unemployment compensation, must be paid a minimum amount of wages during the base period preceding his claim. Rules defining the minimum amount of wages which qualify him will vary widely from state to state. The base period during which he must earn the minimum is generally the first four of the last five completed calendar quarters before the claim.

You should consult those rules which apply specifically to your state.

If a worker does not meet the minimum earnings standard during the base period, nor does he fit into any of the exceptions which his state may make to the rules, then he will fail to qualify for unemployment compensation benefits, and all decisions regarding eligibility after that become moot.
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Not all employment is covered by unemployment compensation. A common example is employees of federal government. As with so many laws and regulations, government excepts itself from the effect of unemployment compensation laws, and so its employees may earn plenty of wages during the base period, and yet none of those wages may be in covered employment, preventing them from collecting benefits, even if the employment from which they were laid off is itself covered. So, say a soldier retired from the Marines and took a job in private industry from which he was promptly laid off. All his wages earned in the military will not count as base period wages.
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Once a worker has been disqualified for unemployment benefits, or if he has exhausted his benefit year, he may have to purge that disqualification. Many states will prescribe a certain amount of money which a worker must earn, and / or a certain amount of time during which he must work, before he can qualify for unemployment compensation. This purging requirement is generally called requalification.

Generally, it works like this: If a worker qualifies for unemployment compensation, he will begin a benefit year. This means that he has 52 weeks during which he can collect 26 weeks of benefits (unless a benefit extension is in effect). At the end of this benefit year, he will have to work and earn again before he can collect more benefits.

In some states, he may only have to wait for the benefit year to expire, apply again, thus establish a new base period, thus a new benefit year, and collect again.

Requalification requirements may differ wildly, from 3/13 of the wages in the high quarter of his base period to five times the weekly benefit amount, to all sorts of idiosyncratic formulae. You should consult the requalification methods in use by your state.
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If a worker has a continuous period of illness or injury, and especially if he has received workers' compensation for the period, then state law may allow the worker to retain his base period earnings for unemployment purposes, beyond when they otherwise would have expired.

For example, say that a worker were seriously injured on the job and underwent three years of rehabilitation, during which he collected workers' compensation. At the end of the three years, he is ready to work, but his employer has naturally enough replaced him in the interim. He is therefore unemployed. At this point, if the state agency were to look at the first four of the last five completed quarters, it would have to say that he has no earnings during the base period. Because this unfair disqualification occurred through no fault of his own, states make special exceptions which retain the work time and the earnings from the base period before his injury, in order for him to use it now.
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If a claimant is in other respects qualified, but he has not filed a claim and registered for work, he will not be eligible.

Again, this is not so obvious as it may seem. Say that a claimant filed for benefits but did not register for work; is he eligible? Say that a claimant searched for work on his own for five weeks after he was laid off before he filed a claim; is he eligible for benefits for the five weeks? Say that he files, registers, but then goes to another state to search for work for three weeks; is he eligible for the three weeks during which he did not report to the state agency office?

The answer is that the claimant will generally be held to each jot and tittle of regulatory punctilio which can be made to apply.
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Workers employed by an educational institution may not be paid unemployment benefits during a period between two successive academic years, if they worked for that school during the first year and have reasonable assurance of working there in the next year. Nor may they collect for any week of a school holiday.

In other words, teachers cannot generally collect during summer vacation, Christmas, Easter, etc.

Although this rule should be very simple for teachers to understand, it has nevertheless been unsuccessfully challenged in court in state after state, time after time. Interesting litigious twists arise from the how the rule should apply to janitors, substitute teachers, coaches, bus drivers, etc. etc.
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Generally, legal aliens are not eligible for unemployment compensation. The states are, however, more than glad to collect taxes on their wages for insurance which they cannot collect.
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Just as teachers are not paid benefits during summer vacation, likewise athletes are not paid benefits during the off season.
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From state to state, we find various quirky exceptions to unemployment rules. In one state, for example, certain employees at a ski lodge may not be able to qualify for unemployment benefits. In another state, groundskeepers at a country club are singled out for disqualification. In the next state, something else equally odd.

It is quite possible that state legislators in these instances have used their pull to introduce amendments to unemployment laws which satisfy a private pique of their own, even though these rules may make no sense in the grand scheme of things.

We make no attempt in this manual to enumerate all such quirky exceptions.
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Minnesota is the only state we know of which, at this writing, disqualifies employees of designated seasonal employers. So a lawn mower in Minnesota may not collect unemployment during snow season, nor may a snow plow driver during summer.

The employer must be designated a seasonal employer according rules and forms put forth by the state agency.

The state still collects taxes for these benefits which it will not pay.
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Agricultural workers are generally not covered by unemployment insurance.

Farm workers are workers too, so why shouldn't the same unemployment benefits be available to them? Their work may be seasonal, but so is construction, and construction workers are covered. This is an odd rule. But even odder exceptions may some day apply. See the "War Story" immediately below.

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Pensions are generally deducted, either in whole or in some pro-rated fashion, from a claimant's benefits. This may well leave nothing at all for the individual to actually collect.

As an example: If a man risks his life in the service of his country for twenty five years and earns a pension for it, that pension is not apt to be enough to live upon, unless either he gained high military office and hence collects a larger than ordinary pension, or he moves to a third-world country, as many do. Therefore, the likelihood is that he will have to take a job in order to make ends meet. If he is laid off from that job, the amount of his pension will be deducted from his unemployment check.

Workers have even been denied benefits for pensions to which they were entitled, but which they never received. For example, in New jersey, a man was laid off from his job after 38 years. He was entitled to a pension. He elected, instead, to have his pension funds rolled over into an IRA. Because he could have collected pension, even though he didn't, he was denied unemployment.

The state agency will blithely collect taxes for the benefits not paid.
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The purpose of unemployment compensation is to pay benefits to workers who are unemployed through no fault of their own. In respect to labor disputes, three points arise from this principle:

  1. State unemployment agencies generally will not pay benefits to workers who are on strike, since that is construed to be a voluntary action on their part.
  2. State unemployment agencies generally will pay benefits to workers who are locked out, as that is not a voluntary action on their part.
  3. Labor disputes which do not result in either a strike or a lockout do not result in unemployment, and are therefore moot.

Of course, the Devil is always in the details, and never more so than here. Here, difficulty primarily arises when the union claims that they are locked out while the employer claims that this is a strike. To further complicate matters, unions generally collude in ways which are prohibited to employers. So a strike at one plant may bring a sympathy action at a second plant. So, although there is no dispute at the second plant, neither is there work. Then there is the question of safety. After a long history of tacit acceptance of union hoodlumism, even a non-union worker at a second plant may justly fear to cross a picket line at his plant manned by workers from the first. Add to this the matter of supply. Plant two which depends upon parts from plant one may have to shut down when a strike or lockout at plant one shuts down the flow of those parts. What if a worker is not union, but is out of work because his plant closed down when the union members went on strike? Is he locked out or on strike? And what if a striking worker is permanently replaced during the strike? And on and on it goes.

We find that there is such a disparity from state to state regarding eligibility for benefits during labor disputes that few generalizations can be made beyond the broad distinction, which does not always apply, between workers unemployed because of lockouts and those unemployed because of strikes.

For help specific to your circumstances, call Unemployment Tax Advisory at 1 800 998 8822.
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If a claimant knowingly makes a false statement, or if he fails to disclose a fact would affect his benefit eligibility or his benefit amount, then he has committed fraud.

The majority of fraud in unemployment compensation claims involves claimants failing to report earnings while collecting unemployment benefits. Claimants are between a rock and a hard place. During a time of severely straitened financial circumstances, the law requires them to voluntarily forgo some part of benefits which are designed to be inadequate to start with. For example, say that a family man earning $900 a week is laid off. He will collect about half his average weekly earnings up to a modest limit. If the limit in his state is, say, $320 a week, then that is all he will collect. This amount is quite inadequate to pay his bills. While looking for employment, he may therefore be glad to earn a couple hundred dollars helping his brother on a roofing job. He will not be so eager to report the earnings to the state, which would promptly deduct them from his benefit.

Claimants discovered in fraud are commonly required to repay the benefits which they wrongly got, possibly along with all the other benefits which they received, and quite possibly along with other fines, and / or, theoretically, jail time. But the penalty which is important for our discussion is the consequent disqualification for benefits, as outlined below.

Cancelled Claim:
Fraudulent claimants may face total cancellation of their claim. Therefore, a claimant may in all other respects be eligible for benefits, yet be unable to collect because of his fraud.
Forfeit of Rights:
Fraudulent claimants may forfeit all rights to future benefits for a period of time. Therefore, a claimant discovered in fraud during his last period of unemployment may not be eligible for benefits during this period of unemployment.
False Witnesses:
Fraud penalties may also apply to those who give false statements on behalf of another. Therefore, a co-worker who fraudulently misstates the circumstances of a discharge in order to help another worker collect may himself be subject to the same disqualification.
A worker who has been guilty of fraud may be required to requalify before he can apply for benefits again. In other words, he may lose all the work and earnings credits which establish his base period, so that he has to start all over again as though he had just entered the work force.

All these penalties vary widely from state to state; and they vary even more widely in their enforcement.

Of course, fraud also applies to employers who knowingly misrepresent or omit to disclose material facts which affect eligibility or benefit amount. But these frauds are subject to monetary penalties only, and do not affect eligibility.
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Many states have some sort of exception dealing with either regular scheduled vacation plant shutdowns, or with shutdowns for plant retooling and the like. Whether an employee can claim unemployment during such periods, and under what circumstances, will be entirely specific to your state, and frequently turn on technicalities. For example, a worker in Indiana collected unemployment benefits because his holiday pay was not paid to him until after the holiday, on the regularly scheduled payday. Had it been paid to him before the holiday, he would not have collected.
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