Can i collect unemployment if my job only offers job options I can refuse?

January 28, 2009 6:26 AM

Due to cost saving measures, my company is about to remove health insurance and my bosses are basically looking for me to become an independent rep for them....Can I colect unemployment should I feel I was put in a position that I could no longer work under those conditions? (the full story (i think) inside...

I am an advertising sales rep with my magazine for almost 10 years. I make salary and commission.
I am married with a 1 year old child living in NJ. I work though in NY.

I was told tonight that due to the economic climate, that the company is looking to restructure my position and is asking for me to brainstorm idea's on a suitable solution for both parties rather than them making it for me.

Option 1)
Salary cut, commission raise, work in office 2 days a week, no medical insurance.

Option 2)
I become an independent sales rep. No salary, high commission (industry standard for a rep is 20%), work from home, no medical.

I am not sure what the better option is, although I feel that Option 2 might be it.

Option 1 will give me at least a guaranteed bi-weekly paycheck in addition to my commission. Although the industry suffers, this is a niche magazine where there will always be business coming in...If it is a bad/week month, I know I would still get a paycheck of some sort. The bad...I still would have to commute into the city.

Option 2 gives me total independent freedom as an ad rep and will allow me to do my job for other magazines as well. I have toyed with the idea of starting an Independent Ad agency for my niche market for the last year anyway.

Having medical taken away seems to be a given. I don't really see any other scenarios. I certainly won't continue to work full time out of the office without medical.

If I decline these one of these two options presented to me, what happens? Can they let me go 'with reason'? Will I be able to collect unemployment? I think they are giving me a few weeks to decide...

I guess my question comes down to is unemployment....Since they are still giving me option to stay aboard and to keep the position in some capacity, are they protecting themselves from having to pay me unemployment should i decide not to accept either option?

I am not sure how it works....Since I have paid into it for all of my adult life, would this scenario constitute me being allowed to collect?

My biggest concern is medical for me and my family. I'd rather use all my time trying to find a new job (with medical) in this horrible climate.
I'd rather walk away from this job , but won't unless I know I can collect....Is this a simple matter of calling my state dept?

thsanks for your input..

posted by TwilightKid to work & money (17 comments total)

option 2, with additional your partner working. Can your partner work?
posted by By The Grace of God at 6:49 AM on January 28

It sounds like you feel you have to solve this alone. I'd suggest negotiating with them instead.

How are your numbers as a salesperson? Are you below par, above par, exceptional? With 10 years, you have an established track record and presumably valuable contacts. Your rolodex and experience may be worth a lot.

If you're in a good position, negotiate! Actually, negotiate no matter what. There's only upside for you.

For example, you could offer to take a sizeable salary cut by *deferring* salary - in other words, the cut is a loan from you to them that they can repay in a year or two. This is something that can work out well for everyone.

Alternately, ask them to propose something. You can reject it and either keep your position or get laid off and collect unemployment.

If you've never been on unemployment, you should look into whether it's going to be large enough to affect your decisions. For exampe, unemployment in my area maxes out at about 1/4 of my rent. It's nice to have, but doesn't provide any real security.
posted by zippy at 6:56 AM on January 28

One other point, normally, I'd say that you have COBRA, so you don't need to worry about whether or not you'll have insurance, just whether you can cover the monthly cost. However, I think COBRA doesn't protect you if the employer no longer provides medical insurance. You should look into this and make plans for alternative insurance if necessary.

If you're in the US, you can get decent pharmacy prices and optometry / eye glasses through CostCo (and possibly Wal-Mart too). CostCo also offers an insurance plan, and you may be able to find decent insurance through professional associations.
posted by zippy at 6:59 AM on January 28

I am not sure how it works....Since I have paid into it for all of my adult life, would this scenario constitute me being allowed to collect?


Unemployment isnt some kind of savings account with your name on it. When you attempt to collect your employer pays most of it and the state pays some of it. Its a tax like any other. If you qualify by your state rules then apply for it if you cant work something out with these guys. Considering how bad their finances must be they will most likely contest it.
posted by damn dirty ape at 7:29 AM on January 28

FWIW, Ive never been able to afford COBRA. When Im between insurers I just buy cheap temporary "emergency" insurance for a fraction of the cost and wait it out.
posted by damn dirty ape at 7:30 AM on January 28

I seriously doubt you can file for unemployment, since you aren't actually being laid-off or subject to a reduction in workforce. You'll still be working, afterall. Just as a contractor.

COBRA probably won't be an option for the same reasons. Ina nay case, it would probably prove cheaper to shop for your own health coverage, if you can at all afford it. COBRA is almost universally hideously expensive, even when compared to private policies.

Essentially, your (soon to be former) employer is looking to reap the financial benefits of eliminating your position while still retaining your services.
posted by Thorzdad at 7:42 AM on January 28 [1 favorite]

IANAL, but: when an employer tries to get you to switch into another job with different terms of employment rather than dismiss you outright (and refusal means you'll be dismissed), that's called "constructive dismissal" -- the idea being that they have in effect terminated the existing employment relationship, and are offering you a new one. In many jurisdictions (I do not know about yours) that amounts to dismissal. You should look into this via a lawyer, or other knowledgeable professional, and determine the potential implications with respect to unemployment, etc.
posted by onshi at 7:58 AM on January 28

my company is about to remove health insurance

Can you clarify exactly what this means? Is your company dropping its group health plan for everyone (so no one will have insurance), or is it just looking to drop health insurance for sales reps?

If they are dropping their group plan entirely, you may be out of luck in terms of COBRA (although you should definitely follow up with an HR rep and ask specifically about COBRA and whether it will cover you)--if the group plan doesn't exist any more, you can't join it. If they are only moving your position to one that doesn't get health insurance--by dropping your hours down to a part-time employee or contract worker who doesn't qualify for full benefits--then you might be able to snag COBRA coverage for 18 months, which would give you some breathing room and allow you to keep working for them (making money) without stressing so much about the health insurance aspect. You'd generally be paying more for the same coverage, because you'd be covering 100% of the cost rather than having your employer kick some percentage in on your behalf, but at least it's a way to keep coverage. The key words to use when talking with your HR department would be, "Do option #1 and #2 count as qualifying events that would allow me to get COBRA coverage?"

If your company is dropping its health insurance for everyone, you might want to look into Section 125 "premium only plans" to see if the company would consider keeping that benefit in place. Basically, this allows employees to make pre-tax contributions to health insurance premiums (saving you 20-30% on the cost of insurance), while also lowering the employer's tax burden in terms of FICA, potentially saving them money overall. You'd be on the hook for more of the premium than before because the company wouldn't contribute anything, but don't underestimate how much paying premiums pre-tax can save you over the course of the year. This option probably won't work for you if you're a contract employee, so if they're open to it you'd need to be willing to go with your option #1 (and your reduced salary would need to be enough to cover the cost of your premiums).

Buying your own health insurance through the individual nongroup market in NJ is pretty much the very last option I would consider. (Can your spouse get insurance through his or her job?) If you live in NJ, the individual market will be expensive. You can browse through some of the monthly rates here. You might have more luck in the non-standardized plans, although I suspect that those are also either quite expensive or near-impossible to qualify for. Basically, if there's any way for you to keep a group policy through your employer in New York--even if you're paying for the full cost of premiums--it's probably going to be cheaper than trying to buy on your own in New Jersey.
posted by iminurmefi at 8:03 AM on January 28

My numbers are good, and since we are a niche magazine, although there has been drop off in sales, I don't think it has been large enough to jeopardize the magazine as a whole...

I do have giant rolodex, but when the new owners took over, we moved over to filemaker program, so now all of the contacts are company property..although i do have a copy for myself, for this potential situation
posted by TwilightKid at 8:18 AM on January 28

In my state (Wisconsin) in this situation, I do not think you would qualify for unemployment, as your benefits were just reduced. Like zippy said, with a family to support, I doubt unemployment will really be enough money to sway your decision. (New Jersey's maximum weekly collection was $560 in 2008) ALSO, even if you are entitled to unemployment, it is an unusual enough situation that your employer will likely contest it, and that will take a lot of time. And they will likely win.

Take option 2 and look for something else..maybe you can negotiate your current employer paying a month or two of your COBRA while you try to find a different employer or different health insurance?
posted by mjcon at 8:26 AM on January 28

IANAL, but: when an employer tries to get you to switch into another job with different terms of employment rather than dismiss you outright (and refusal means you'll be dismissed), that's called "constructive dismissal"

Constructive discharge cases are somewhat difficult to prove and win. Employees must show that they were compelled to resign because their employer made working conditions intolerable.

This article includes information about the elements of constructive discharge.

There must be
(a) recent and substantial change to a person's job or work conditions;
(b) the changes must be "so extraordinary and intolerable that they would compel any reasonable employee to quit under the same circumstances";
(c) the changes must be related to a legal violation (e.g., discrimination) or an attempt to restrict the employee from exercising his/her legal rights;
(d) there must be no justifiable reason for the change.
posted by terranova at 8:48 AM on January 28

I was thinking along mjcon's thoughts - would option 2 provide more money than you would collect through unemployment? You could work in finding a new job along with your independent rep work.

I defer to the people above re: COBRA, although I would definitely look into it. If you've had medical up until now, look into what would happen if you had an interruption in coverage (in terms of how it would affect future insurance scenarios), and see if you can in any way swing getting some coverage on your own if you need to. Do you belong to any industry associations that might offer coverage to members? Maybe some kind of alumni coverage? Agreed, less than ideal scenarios, just some thoughts.
posted by KAS at 8:52 AM on January 28

You probably don't qualify for constructive discharge based just on a cut in benefits (the cases I've seen work were egregious sexual harrassment, racial discrimination, etc.), so probably no good shot at unemployment benefits since you are not being laid off. Do you have a contract? If so, what does it specify? Without a contract that is being violated, I would stay in the job, look for another, get health insurance through a professional association or other source, and not gamble on unemployment. If you wind up reaching an agreement with your employer, get it in writing.
posted by *s at 9:21 AM on January 28

I did some research, and in my state (California) you would qualify for unemployment if you quit as a result of your employer forcing you to take lower wages.

When you leave a job, it's a 'voluntary quit.' When you file for unemployment for a voluntary quit, the unemployment office will determine whether you had reasonable cause to quit - that is, if it was for 'good cause.'

Your case, in California, would count and you would be entitled to unemployment.

www.edd.ca.gov/UIBDG/Voluntary_Quit_VQ_500.htm#Wages
3. Violation of Agreement or Misrepresentation

Title 22, Section 1256-22(b), provides in part:

An individual who leaves work due to dissatisfaction with some aspect of wages has left work with good cause if the leaving of work is for any one or any combination of the following reasons:

(4) The employer substantially breaches the agreement with an employee as to the agreed rate of pay.

(5) The employer makes substantial misrepresentations to the employee as to the . . . wages of the job.



Your state may differ, but I hope that this is, at the least, a helpful starting point. Good luck.
posted by zippy at 4:57 PM on January 28 [1 favorite]

One more excerpt that's even more to the point:

5. Wage Reduction

An employer is often forced to reduce wages for economic reasons. However, the fact that the employer's declining business necessitated reducing employee wages, does not impose a duty upon the employee to accept the reduction. In cases involving wage reductions, good cause is measured by the reasonableness of the claimant's actions in relation to the circumstances existing at the time of quitting.

[...]

a pay decrease of 20% or more, taken alone, is a substantial reduction in pay to establish good cause for leaving work where the employee is notified of a transfer or demotion to another position with the employer. Pay includes the basic wage, shift differentials, board and room furnished by the employer and guaranteed overtime. Pay also includes fringe benefits such as vacation pay and insurance if such fringe benefits are currently available or set schedules and information to value fringe benefits for the former and other position are available.

posted by zippy at 5:01 PM on January 28 [1 favorite]

What happens to you if you refuse both offers? If they let you go, then it's a Reduction in Force (RIF) and you will qualify for unemployment.

If you become an independent sales rep, then you are a contractor, and no longer an employee of the company. You should see if you can join Freelancer's Union and qualify for their health insurance. I am not sure if your particular sales group is eligible, I haven't looked in a while.
posted by micawber at 7:41 PM on January 28

Hey zippy,
thanks for the info. RE: CA good cause. That is my situation exactly here in Sacramento, where my boss told me he was unsatisfied with my overall skills as a waiter, did not offer me any more waiter shifts, but said he had the occasional busboy shifts (this week 2 shifts for example).
No offense to the busboys of the world, but where I work they earn 50 - 60% of what the waiters earn. Plus, my number of shifts has gone down with this demotion.
Do you (or anyone else here) think that the Wages clause you posted applies to bosses that try to demote you not for economic reasons but for performance judgment?
Additionally, he says my contract says simply "employee", though it is clear I was hired to satisfy a particular job position, and that I only worked as a waiter since being hired.

I don't want to be on unemployment, believe me this is all humiliating to me. But what he is offering me as an alternative is not "suitable work" in legal terms, and I do not want to be forced to come back to work where I was essentially fired, where I have friends, and work a job far less than I am experienced to earn, that pays far less then I am used to earning.

Thanks! (love this site)
posted by tomindavis at 10:34 AM on March 15