Does my website revenue count against unemployment?

November 26, 2008 11:18 PM

UnemploymentFilter: How do alternate income streams factor into unemployment and how many months do I have left?

I live in Chicago and am likely going to be laid off in the next couple of weeks as I was asked to re-interview for my position and it appears that despite how much everybody loves me, one key decision maker doesn't think I have what it takes. Whatever.

Anyways, so I was unemployed from around 3/5/08 - 5/19/08. I didn't draw unemployment benefits the whole time, maybe just a month and a half since I received a month's severance from the job I had prior to March.

I also now have a website I've been working on that provides on average $500/mo in passive revenue (and hopefully more in the future).

That said I have two questions:
-How do I figure out how much unemployment I have left?
-Do I have to declare my website and the revenue it generates when applying for benefits? Is there a chance it could prevent me from getting them or drastically reduce the amount I receive? How does something like that work? Its not like I'm salaried. It is essentially a sole-proprietorship with its own EIN and bank accounts.

I'm hoping that I can draw my full unemployment benefits from my last couple of jobs and still pull in the income from the site. I also am not sure how many months of unemployment I have left since I heard something like you only get a total of 12 months in your lifetime--although that could be completely false.

Any guidance you guys can give would be much appreciated as I make preparations for the likely event of being laid off.

I'm hoping that with full unemployment benefits, the income from the site and my savings, I can ramp things up and be doing my web stuff full time and get out of the rat race.

Happy to answer any additional questions that might be needed to clarify things.

posted by Elminster24 to work & money (10 comments total)

As I recall from being on unemployment in Illinois and having a bit of freelance income on the side, there's a risk they could find out that you have this other income and you could be prosecuted for benefits fraud.

At that time there was an automated phone system that would give you information, once you entered your PIN, on how many weeks of benefits and such. This may be online nowadays.

There were also booklets and brochures available at the unemployment office that explained how to calculate your eligibility, e.g. when you work a few hours a week.

The "lifetime total of 12 months" is false. You become eligible for unemployment at a certain point, then you have a 12-month "benefit year" during which you can draw unemployment. The amount is calculated on a points system based on your pay-in. Once you are off unemployment, or probably any time you work after applying, you begin to accrue points again. There is a window of ineligibility, but then once you become eligible the payment you get is based on the points you have paid in. Details have probably changed, but that's the gist.
posted by dhartung at 12:31 AM on November 27, 2008

Google "total unemployed." People who lose jobs from which they earn their living are regularly denied all unemployment benefits on account of their continuing involvement in side ventures that generate little or no income. It doesn't help that it is a sole proprietorship rather than employment.

It's one of those ways that the regulatory structure of welfare, with its perverse incentives, creeps into unemployment benefits, which is funded from insurance premiums and thus is not in principle welfare.
posted by MattD at 7:54 AM on November 27, 2008

Keep in mind that the Unemployment Compensation Extension Act of 2008, passed last week, increases unemployment benefits by seven weeks for all states and by 20 weeks for all states whose unemployment rate is higher than the national average, of which Illinois is one.
posted by WCityMike at 9:29 AM on November 27, 2008

I have to say, by the way, that as someone who just went through the process of getting unemployment set up, that nowhere did I run across a discussion of "points." My understanding, unless I've drastically got it wrong somewhere, is that before the passage of the Act I just mentioned, you got six months of unemployment benefits per year, the year beginning on or around the date you first apply for unemployment.

Under such a situation, assuming I understand it correctly, say you lost your job on December 31, 2008 and were out of work the full six months -- going back to work July 1, 2009. But somehow you lose your job after say two months, your last day of work at Job #2 being on August 31, 2009. Prior to the UCEA passage, you would not have had unemployment benefits from September 1, 2009 until January 1, 2010.

With the UCEA, if I am understanding the legislation correctly, this expands to 11 months of benefits per year, in Illinois -- which strikes me as almost too good to be true, thus my uncertainty, but it's how I'm reading it.
posted by WCityMike at 9:58 AM on November 27, 2008

Also, this is the Illinois Department of Employment Security administrative law manual. I suggest you download it and search through it for the term "self-employment".

This seems a relevant section, although I am not a lawyer, I am not your lawyer, and this is entirely a layman's reading:

If the individual is self-employed, availability depends upon the nature and extent of that self-employment; whether the individual's investment of time or capital prevents him from accepting other work in the labor market.

Example: The individual worked as a secretary in a real estate agency. When she was laid off, she grew depressed, until she watched a cable television show. The host explained how to buy property without making down payments and how to enhance cash-flow. It sounded so easy that she immediately rearranged the den in her house to serve as an office. In the morning, she would read newspapers and make telephone calls. She went to foreclosure sales and auctions. Most afternoons and evenings, she would inspect properties. She also applied for jobs in her usual occupation, secretary. This individual would be determined available for work, if the trier of fact finds that she had not yet made a substantial commitment to her own business. If, however, she had purchased properties, and was involved in the management of those properties to the extent that it would conflict with normal working hours, she would be determined to be unavailable for work.

In the above example, if I'm reading it correctly, "available for work" is what you want to be to get benefits, whereas "unavailable for work" is not.
posted by WCityMike at 10:22 AM on November 27, 2008

Fantastic answers guys. I might have to check with a lawyer on this but hopefully WCityMike what you posted is true.

I've setup my website so it has minimal time involvement (passive revenue stream) so I'm completely available to work. In fact, I've run the website while I've been working this past job and it takes up maybe 1-2 hrs a month. I just hope the revenue from it doesn't grow to a point where it can't quite support me but is enough to interfere with unemployment benefits in some way.

If I do get accepted for them, that new Extension Act is a huge blessing. That could give me the time I need to really ramp things up and make this work!
posted by Elminster24 at 12:06 PM on November 27, 2008

FYI, I'm unemployed and in Chicago, and the telephone reporting service does require that you tell them of any self-employment income you have; those will then be deducted from whatever benefits you qualify for. If you don't report those earnings, you run the risk of prosecution. So, something else to keep in mind as you plan.
posted by carrienation at 3:17 PM on November 27, 2008

I live in California so the rules may be different. I was looking into unemployment earlier this year when I lost my primary job. I had, and continue to have, a secondary internet-based job that brings in a fluctuating amount, averaging about $750/month. At the time, based on what my weekly unemployment checks would have been (which is calculated by your income of the previous year) I was making too much on the side to be eligible for unemployment. So in this case it didn't matter that my second job was a home-based "passive" computer job, it just mattered that I had a source of steady income. YMMV.
posted by Bella Sebastian at 4:45 PM on November 27, 2008

interesting question and my situation relates:
I was just told that I will be laid off tomorrow, November 28th. However, two days ago i received a Tax EIN because I wanted to open a business account at my local bank. I signed up as a sole proprietor for the EIN. The sole proprietorship is just a side project i wanted to make look professional for the individual who would like to invest. As it turns out, the individual investor in this business wrote me a check for $5,000, it cleared, and now called me to tell me he wants his money back and he no longer wants to be involved in the project. I am worried that when i apply for unemployment on Monday, they are going to tell me that I don't qualify because I have I am a sole proprietor (have a sole proprietor EIN with my social security number), or that because i received $5,000 in a bank account that lists me as the sole proprietor a lot of issues might arise.

Can someone please advise if i should be worried and what i should do?

Thanks.
posted by vivitron at 9:21 PM on November 27, 2008

by the way, this all takes place in NY. Thanks
posted by vivitron at 9:22 PM on November 27, 2008