question regarding working on a freelance basis while on unemployment in NY

by siobhan

(ny)

Hi! I hope you can help. I’m on unemployment in NY. I have taken on a few freelance projects and am so confused about how to account for this income on the NY labor department website for the filing of weekly claims. Most of my work is for a flat fee, so for the last project I did, I indicated a break in my claim for the week in which I received the check. Now I’ve received a form in the mail from the labor department, with all sorts of irrelevant questions, and a section for my “employer” to fill out.

The last thing I want is for a client to receive paperwork from the state indicating that I’m on unemployment. I hope to get more work from this client in the future, and don’t want them to associate me with bureaucratic paperwork.

I finally got through to the department on the phone, but the woman really didn’t seem to understand my problem (which canNOT be a unique situation!), and her advice was very vague.

What can I do about this situation, and what can I do in the future? Should I not indicate a break in claim when I get paid for a freelance project? My benefits will run out at some point this year, so any income reported by me or my clients to the IRS could be attributed to work that I did after my unemployment runs out.

Sorry for the length, but this situation is so needlessly complicated!

Siobhan

Hi Siobhan,

Supposedly, the requirement is to always report the wages earned in the week they were earned .. and not necessarily paid.

I first began to see if I could find an easy solution to your problem on this page.

I was looking for something that might address “freelance”, contract work or self-employment and how monies earned should be reported under these conditions. I didn’t really find anything that answered your question.

So .. without knowing what kind of irrelevant questions the state is asking .. I’ll take a stab at what I think they may be concerned with.

They are trying to figure out if you were an “employee” Since I am not able to see the questions they ask when you recertify or reopen a claim I can’t be sure that your problem might not lie in something as simple as clicking a wrong box. I know that in my state, the online form to recertify or continue claiming benefits, differentiates between types of money earned.

If you’re wondering why they would do this, it’s because anyone who has been awarded benefits is now watched for other issues that could create disqualifications like refusal of suitable work, quitting subsequent suitable work without good cause, not making yourself able and available for work .. etc. They also want to make sure all employers who should be paying taxes, are paying taxes.

Somehow, you will need to show that this was freelance work and there wasn’t an employer/employee relationship that would require your client to pay UI taxes on what you earned and hope that this isn’t a question of failing to report wages properly.

Lots of employer do try to bypass taxes by claiming someone is an independent contractor, but and employer/employee relationship is determined by a state specific test. You’ll find that information under “coverage” here.

You might need to attach something to what you did receive from the state to straighten them out, otherwise you may end up receiving a determination denying benefits because they have assumed you quit.

And I do not guarantee that they still won’t feel a need to contact the clients.

I realize how frustrating this is and I’m sorry the person at the NYS Labor Dept. was of little use. There are a whole lot of new and inexperienced people working in UI nowadays. When I called state agencies on a regular basis, it was usually an appeal office. It was not uncommon to speak with at least three or four people to get an answer that satisfied me.

Huh!! You’re sorry about your length:)

Chris

Comments for question regarding working on a freelance basis while on unemployment in NY

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Mar 31, 2015
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Freelancer Break in Claim Form Confusing

by: Anonymous

I was laid off from a job in June and filed a NYS UI claim. I found a job 6 weeks later and stopped claiming benefits. Then I was laid off from that full-time job in February and started claiming benefits again on my current claim (the first company I was laid off from is paying benefits now), which expires in June, a year later. I recently did a freelance job for a few hours and when claiming my benefit for that week, I marked I worked one day. Then I received a break in claim form in the mail asking “Who was your last employer before XX/XX/XX? I called three different unemployment representatives to ask who is the last employer? Myself, the last company that laid me off, or the company I did the freelance 1099 work for? The first rep told me to fill in “self” and put my address. Two other reps told me to write the name of the company I did the freelance work for. They said they will mail the company a form asking the reason why I no longer work for them (lack of work). The reps all said that the freelance 1099 employer will then be considered the most recent employer should I have to file a new claim in June. Not the most recent full-time employer that laid me off and is responsible for my having to received Unemployment Benefits. #10 on the break in claim form says “Are you self-employed, or did you have any business , or are you engaged in any other activity, which brings in or may bring in income? If “Yes” please explain.” But is an independent contractor/freelancer the same as self-employed in NYS UI’s eyes? Why is this not CLEARLY spelled out with instructions in their claimant booklet? I am worried that the companies I do freelance work for will shy away from giving me work when they receive a form asking why I don’t work there any more for each job I do. Also, the 1099 company will be considered the most recent employer if I refile. I have called quite a few employment lawyers and they don’t handle this unemployment questions. Any feedback would be appreciated as I don’t want to embarrass myself and potential clients and also not become ineligible for opening a new claim (if needed) in June.

Chris’s Response – I’m not a lawyer either .. but I’ll give it another go to explain how I see your IC, or Employee question

You wouldn’t be the first freelancer that has had this problem, but you also really can’t have it both ways in June when your current BY (benefit year) expires and you would also need a sufficient amount of new base period covered wages wages to qualify for a second benefits year.

1. A claims adjudicator likely would want the name of the last client you worked for so they can send a notice of claim filed to them and see what response it brings back. I’d think the client would verify the reason you say you’re no longer working for them and need to reopen your current claim .. because to not do so could get them in hot water if it is determined you weren’t an IC, but an at-will employee making your earnings subject to the any combination of the ABC test in the coverage chartbook linked to up above.

2. Additionally, any UI department in the country knows it’s not just employees who commit UI fraud, but additionally employers, that do try to avoid the burden of paying unemployment tax on what they pay employees they only call independent contractors, or freelancers. .. not to mention all the other hidden costs of employing real at-will employees.

3. 1099 wages are not covered wages unless the state allow a business owner to pay UI taxes on what they pay themselves. But it wouldn’t be suitable earnings for also requalifying for a second benefits year if no one paid unemployment tax on the earnings, or further business building actions bring the claimant ability and availability for a job into question .. but as an individual freelancer there may be a question that forces an employee or the state itself needing to appeal to drag an employer into an unemployment appeal charge hearing to prove the employer was erroneously classifying an employee as a self employed IC to initially avoid pay the tax the employer would now likely have to pay an additional penalty, or interests on.

4. And then of course, there’s the fact that freelance work, is actually an effort to be self employed and how a state treats those who just do the occasional freelance job even if sporadic.

Treatment varies state to state .. but thank goodness the NY interpretation index addresses some situations involving self employment and unemployment even if based upon the separation from the most recent employer.

Hope my answer helps.