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Hi everyone,

I’m wondering if any of you have had experience with receiving unemployment and being “self employed.” I could really use some guidance here if anyone has some past experience.

I am currently unemployed and considering taking a shot at freelancing at some point if I do not find full time work as a Product Designer or Graphic Designer after my unemployment runs out. With the exception of some smaller projects for friends and family, I have not actively sought out clients before and conducted myself solely as a freelancer so this is all new to me.

I currently live in Wisconsin and there Unemployment website says almost nothing about self employment collecting unemployment. The only thing I could find was this in a FAQ page:

“Will I continue to be eligible for unemployment insurance benefits if I start my own business?”

“If you become self-employed an investigation will be conducted to determine whether or not you are willing to seek and remain available for full-time, dayshift work.”

That doesn't really tell me anything.

So onto my major questions:

- One of my biggest questions right now is how do I claim freelance projects right now while I am unemployed if I start to get some infrequent ones coming in?

- And congruently -

- When do I or (more importantly) the government consider me truly "self-employed"?

I guess at this point I want to just "get my toes wet" before I dive into it. I wouldn't entirely say at this point that I really feel completely prepared nor do I have all the resources I need to pursue a career as a dedicated freelancer. As it has been said many times, people either freelance because they want the freedom to dictate who they work for and how, or they can't find full time work elsewhere and do it out of necessity. I definitely fall into the later category. However a couple good clients and some decent assignments could change that.

I may also take a crack at doing freelance Graphic Design for print. I have done business cards, post cards, magazine ads, post correction for photography, and catalog lay outs in the past so I may look for work in that realm. This is where I'm more concerned about unemployment. If it's a $400 or $600 job here and there infrequently then I'd probably wish to continue to collect unemployment in the hopes that I find a full time Product Design job. On the other hand, if I start making a couple thousand dollars a month and I felt that I could continue to build a decent client base I'd stick with freelancing.

Recently I've been talking to a friend of mine who is also in a similar situation and lives in WI. He's looking for active work but he’s also been taking active steps to setup his own IT Consultant Business. He said he has been waiting for over 4 months for them to determine his eligibility and send him any kind of payment! He said they told him, "Your unemployment entitlement has yet to be established." Even though multiple agents on the phone have told him he’s entitled to benefits, the "manual adjustment department," just needs to approve his claims...but that department is apparently 10,000 claims behind!

So I’m pretty scared of the idea that clicking “self employed” on my benefits claim will basically hog tie me with red tape and suspend my benefits until they further determine my eligibility. To date I’ve only recently finished one project for the business of a family friend, and it only amounts to $700. If I apply the unemployment’s “Partial Wage Formula” that they use for determining your benefits if you were working a part time job, then I would stand to loose $400 of my regular weekly benefits. Basically, I’d make $300 off the $700 I am billing for, and possibly muck up my eligibility. I’m honestly about ready to tell them “don’t pay me until I understand how this effects my unemployment.”

Again I want to state that I’m not trying to commit some type of fraud or cheat the government, I just want to make sure that I’m making an informed and conscious decision about how this effects my Unemployment. In all likelihood when I “reach the end of my rope” with unemployment benefits I’ll be ready and willing to accept the idea of taking a part time job at Starbucks or in Retail, etc and focus on freelancing in my spare time. I just don’t want to draw my focus away from looking for full time work if in the end all I manage to do is spend the next 3 or 4 months trying to find new clients and only receive sporadic income. Hell maybe things could take off and I could make $5,000 in a month, or maybe I could make $300 one week and earn nothing for the rest of the month. I’d rather do that when I’m READY to accept those consequences. Right now my preference is still to find full time work.

Re: Collecting Unemployment and Freelancing?

Postby skinny » July 21st, 2010, 8:40 am


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You might want to talk to a lawyer about this one.
I've freelanced fulltime for the past 10 years and I've never heard of being able to claim unemployment benefits. I heard of one person that tried it and the firm basically said they were crazy for even thinking about it, work someplace for a week and then try to get months of unemployment in the future.
You are your own employer, so who would be paying you? If you're currently getting it based on your work with another company, then you'd have to find out what the exact terms are that would clear them from that obligation.
And if I remember correctly in order to get benefits like that sometimes, you have to prove that you are actively pursuing full-time employment.
The thing with freelance is that you're on your own to sink or swim. That lack of security is one of the dangers. I had one dry year that I made below poverty level, but still ended up having to pay taxes at the end of the year. Unless there was some whole section I missed, that's just the way it is. If I had made the same amount of money working for someone else I would've been able to get all kinds of credits and would've received a refund.
But talk to someone trained in the field, most likely it hinges on the specific terms that would get the person currently paying out of that obligation.

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I've done it, but this was in Michigan and the system there was a little different perhaps?

This was about 6 years ago, but the way it worked in Michigan was that you enrolled in unemployment. Once accepted you had to call in to an automated phone system called "MARVIN" once a week to schedule an unemployment check. The way it worked in Michigan is that I got 8 months of unemployment checks, as long as I called in for them. If I didn't call in one week I didn't lose that check, I could call it in the following week essentially extending my unemployment time.

So, when I had wracked up 40 hours of freelance time I wouldn't call in that week. I think they had it set up that way so that you could get the unemployment money if you needed it, but if you made more than your benefit in a given week you weren't supposed to call it in. I declared everything and never had any tax / legal issues.

I guess it was legal?
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Skinny,

Yes I realize the intent of unemployment is to cover those who are seeking full time work and are not trying to establish a business working for themselves. I don't expect to be able to start freelancing and then say "Well I had a bad month, I'm going to go see if my ex-employer will pay to support me since I can't hack it in business on my own." I realize that's the reality and the risk of going into business for yourself.

My primary goal is still to find full time employment. If I don't find that at the end of my unemployment eligibility then I will most likely take a concentrated approach at freelancing. And like I said, if that means a part time job at Starbucks, etc. to compensate for that then so be it. I just want to figure out what will happen NOW if I start picking up some small jobs here and there. And by all means, if I end up getting a significant project then I will no longer be applying for unemployment benefits.

Re: Collecting Unemployment and Freelancing?

Postby Lmo » July 23rd, 2010, 11:30 am

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The way it works in California:

If you were laid off from a position you are eligible to file for Unemployment Insurance benefits. Your total "award amount" and the subsequent weekly payment amount is determined by a previous quarters' earnings. Currently, 26 weeks is the first claim period; two 13 week extensions are available.

Every two weeks you will receive a "Claim Continuation Form"; qualifying questions are 1) were you too sick, or injured to work? (Y/N), 2) Was there any reason (other than sickness or injury) that you could not work? (Y/N), 3) Did you look for work? (Y/N), 4) Did you refuse any work? (Y/N), 5) Did you begin attending any kind of school or training? (Y/N), 6) Did you work, or earn any money WHETHER YOU WERE PAID OR NOT? (Y/N)

The State allows claimants to earn as much as they can, BUT they must report any, and all, earnings. If, in any given week, you earned more than you receive from UI it will be deducted from your weekly payment. i.e. $450/week is the maximum weekly payment allowed in California. If you earn more than that you will receive nothing from the State for the week worked; if you earned $400, you will receive $50. If you were unable to find work the second week you are again entitled to UI. The effect is that your claim is extended, or pushed back by every dollar you earn. The total amount awarded remains the same, but by virtue of earning some money you are prolonging the "safety net". How one makes money is not a consideration; waiting tables, designing computer peripherals, or digging a ditch ... it's just money to the State (that they do not owe you)..

Generally when this occurs a telephone interview is arranged by a Employment Development Department agent. Questions like: 1) Are you still employed? 2) Do you expect to return to your employer, 3) Why are you no longer employed, etc., etc., etc. are asked.

Unemployment Insurance is not "welfare". You are entitled to it by virtue of having already paid for it through your employers payroll deductions. Whether one opts to file a claim is their decision.
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In Minnesota I did not collect unemployment on the weeks I freelanced. In MN you still qualify for unemployment if you work less than 32 hrs a week and/or your income is less than your unemployment payment. My freelance was almost always below 32 hrs a week and always way more than the unemployment payment. If you make less than your unemployment payment, I think you get a certain percentage of your unemployment paid, but I have no experience with that. I'd go for a month without collecting unemployment without a problem. After the weeks where I worked more than 32 hours, I had to go through an extra step of "re-applying" for unemployment on-line which was not a big deal: I had to click a few radio buttons explaining the situation.

Basically, report the week you work on, not the the week you get paid on. When reporting, I did not list myself self-employed, I registered as working on-call or part time with specific companies I was working for.

I'm not sure how similar WI is to MN when it comes to this issue, though.

eta: While I was not collecting unemployment for a few weeks, I still was reporting weekly that I were working, but it is a part-time arrangement.


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melovescookies wrote:Basically, report the week you work on, not the the week you get paid on. When reporting, I did not list myself self-employed, I registered as working on-call or part time with specific companies I was working for.

I'm not sure how similar WI is to MN when it comes to this issue, though.

eta: While I was not collecting unemployment for a few weeks, I still was reporting weekly that I were working, but it is a part-time arrangement.


This is one thing I may look into further, to see if the client I have been working with could classify me as part time work. I'd rather go through the appropriate system for that and have them pay me for 20 hrs a week for the duration of my project then go through the process of claiming self employment.


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Thanks for sharing your experiences everyone. Having it bump my total benefits back a week at a time every instance I make more then my weekly benefit doesn't sound so terrible. I'm just a little afraid that clicking "self employed" will send my benefits to a screeching halt while they determine my eligibility. I can't afford to go without a check for more then a week or so. I just don't have the savings to fall back on.

I wish the online system for WI had an option to enter an amount of partial wages earned for the week too, which it doesn't appear to do. They ask you "Did you work during the week?" and "Were you self employed?" but according to my friend they don't ask how much you earned or how many hours you worked. I guess I may have to build up the courage to call the WI unemployment office and have them clarify this for me. I might just phrase my questions as "I'm thinking about seeking out freelance projects but I am still actively seeking full time work and my ultimate goal is to find full time employment." "How would I claim freelance assignments if I do find them?"

Re: Collecting Unemployment and Freelancing?

Postby Lmo » July 27th, 2010, 11:10 am

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I guess I may have to build up the courage to call the WI unemployment office and have them clarify this for me.


Honestly is the best policy; although with bureaucracies (like the Employment Development Department) I sometimes have difficulty with employee's lack of compassion (it's strictly a job to them (my assertion is that they should be required, by law, to have to find a new job every eighteen months so someone else can have "a" job (made to share "the gravy" as it were.))) You certainly do NOT want to run amok of any government agency.

I inadvertently reported my "net" earnings as "gross" one week and was not only required to reimburse the great State of California for their "overpayment" to me that week ... I was also fined $250 for the error and penalized eight weeks (had to wait eight weeks before I could file for another check).

I received a notice that a telephone interview was scheduled for a certain date and that I would have the opportunity to explain my "fraudulent" claim. I don't know about you all, but the word "fraud" rings pretty loudly in my ears, and I was more than a little annoyed at being accused to "defrauding" the government. In the end, the telephone interview never occurred, and I was left sitting by the phone all afternoon wondering what had happened (it had be pre-determined by EDD that my "error" was unintentional ... apparently they didn't feel it necessary to notify me of the outcome).

You can bet that the gate would have swung the other direction if it had been me that failed to answer the phone if they had called.

Essentially there isn't anything to be afraid of;they can kill you, but they can't eat you. Look at it as a learning experience. The U.S. economy will be in flux for many years I'm afraid, and you may be well served learning how to deal with this particular bureaucracy.
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Any update on how this all worked out?

I think it's an interesting dynamic. It's a bit tricky here in Oregon. Apparently freelance work in Oregon is defined as "self-employment" and if you're self-employed, then it's your problem if you can't find work. Meaning the unemployment benefits stop. Which can be less than ideal in this current economy.

If you are working on freelance projects, then you are not "actively seeking full-time work." We all know that you can put a days work in and still have time to email off some resumes, but I think the unemployment dept. is behind the times.

If you are receiving benefits, take freelance work, don't claim a week, and then try to claim, you have to restart your claim. At which point they will call your last employer to see why you aren't working anymore. Which is professionally embarassing. AND, they only do that for part-time work. If you state that you are self-employed, your claims go into review, and there is a 3-5 week delay before they resume benefits, if at all.

It kind of throws a wrench in the gears of getting on-track to finding a full-time job. If you're eligible for unemployment benefits for an extended period of time, which many people are these days, you're risking a lot of $$ on a freelance gig. What if it goes nowhere, and you're denied any future benefits?

Apparently lots of companies are hiring people as "contractors" to get around paying UI taxes. The state is cracking down on this loss of revenue.

Bottom line, it sucks to say "No" to freelance work, because you're afraid of losing your benefits.

Re: Collecting Unemployment and Freelancing?

Postby cash68 » July 15th, 2011, 11:32 am

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I live in WI and did exactly what you were talking about during 2009. I graduated in the WORST part of the recession, there were literally 7 junior ID positions posted that entire fucking year on Coroflot.

What I did was setup my own LLC, which I used to write off expenses like my laptop, gas, travel expenses, meals with clients, portfolio printing, business cards, the usual.

Then I freelanced about 20 hours a week, while applying for about 5-10 jobs a week that were SORT OF in my field. I then applied for unemployment, and was accepted.

I got a phone call from the unemployment office, explained that I am actively seeking a full time position, but am currently running an LLC to make ends meet until I find full time employment. I also told him I am not working 40 hours a week, and I do not have benefits of any kind. He said that I was not eligible for unemployment checks. I argued with him, asking why, as I know other people who are doing exactly what I was doing. He said he'd call me back, and he did, and said everything was fine. Also, keep in mind, even if you make $1500 in one week of freelancing, THAT IS NOT YOUR MONEY. That money is your LLC's money, which is owned by you, but it's own company. You can STILL collect your FULL unemployment check despite what you make that week for your company. Again, you are running an LLC purely to help support yourself WHILE YOU ARE LOOKING FOR A JOB.

Overall, it was a good move. I made about 18k in freelancing that summer, and about 4-6k in unemployment that year. I was BARELY able to support myself, but was then able to secure a full time position. Do it. I'd rather you get unemployment while looking than take some crappy job washing dishes or politicians bailing out some gigantic company that's made stupid decisions for 4 decades (cough GM cough).

Re: Collecting Unemployment and Freelancing?

Postby adamk » July 18th, 2011, 10:26 am


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Just wanted to add my 2 cents for archival purposes...

As far as I know you can't collect from a self employed position, unless you are in a union with group benefits. If you are making money as a freelancer AND collecting unemployment, you legally have to report the income, and it will most likely terminate your benefits. If this is the case, try to get paid in small cash increments and keep it off the books (total payments of $500 or less are typically not reported by a business). It is unfortunate but there aren't many breaks for the small guys. It can be frustrating. Especially for a lot of us in the middle area with employees and taxes out the wad.... but I'll save that rant for another day.

Re: Collecting Unemployment and Freelancing?

Postby Azrehan » July 27th, 2011, 9:43 pm

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Did I read that correctly?

$450 a week unemployment benefits?

I think it's $460 a fortnight here.

Re: Collecting Unemployment and Freelancing?

Postby contradiction » September 30th, 2011, 12:13 am


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Sorry I haven't replied sooner, haven't logged in in a long time.

An update:

In the end, I didn't make a significant push for establishing freelancing work and I continued to apply for jobs until I found something. Thankfully that happened right as my unemployment benefits ran out and I've been working since Jan. in a new job. It's not exactly what I want to be doing right now, but it's ID related and it's paying my bills and I'm very thankful for that. I just felt like the start up cost, risk, and uncertainty just didn't make it a wise decision for me.


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