Ask The Lawyer By: Daniel A. Gwinn, Esq. I need my benefits!
REPORTING INCOME LATE COULD GET CLAIMAINT IN TROUBLE
QUESTION: I was laid off from my job in May 2020 and have been receiving unemployment benefits ever since. I have been trying to start my own business, and was hired for a large project; I would be paid when I finished the work. I spent about 80 hours on it over several weeks). About four months ago, I submitted an invoice for more than $2,000. I was finally paid last month, and reported the income to the Unemployment Insurance Agency. Recently, I received a very confusing letter from the UIA that — I think — says I am not eligible for benefits because of “Misrepresentation.” I have been totally honest with the UIA, and reported every cent I made as soon as I got paid. How can I be ineligible? I need my benefits!
ANSWER: Without seeing the letter you received, we cannot say exactly what the Unemployment Insurance Agency decided in your case — and recently their letters have been more than usually hard to decipher. However, based on what you report, we believe the issue might be that you failed to report your earnings on your project as you went along. You are required to report any money you earn in the week you earn it, and not the week you receive your pay.
The rule is often misunderstood. One claimant informed us she had been advised by an agency representative that she could report income she earned as a freelancer when she received it, as long as she did not request unemployment benefits during her “pay” weeks. Unfortunately, that advice is dead wrong.
So how should you account for what you earned from self-employment? If you work as a freelancer, and do not have any costs associated with your work, you can base your earnings on your hourly rate. If you own a business selling a product of some kind — other than your own labor — UIA Form 1785 may help you calculate what you should report each week.
Reporting a large lump sum payment when certifying for benefits is an easy way to raise red flags with the Agency. At best, you will be ineligible for the week, but at worst it will appear that you are working full time and still trying to claim benefits — and that could be viewed as misrepresentation. Misrepresentation involves deliberately failing to provide relevant information to the UIA when claiming benefits (like the fact that the claimant found a job) or providing misleading information in order to qualify for or continue to receive benefits.
If a finding of misrepresentation is allowed to stand, you could be subject to a penalty of 1.5 times the amount of the benefits the UIA believes you received improperly, and would also have to repay those benefits. For example, if you received $5,000 in benefits through misrepresentation, you would be required to repay the Agency $5,000, and an additional penalty of $7,500 — for a total of $12,500. That hefty penalty is less than it used to be: A couple of years ago, a person who received benefits through misrepresentation could have been assessed a penalty of four times the amount of the benefits received!
If the UIA believes you have misrepresented your eligibility, you need to get in touch with them — fast. Due to the increase in the number of unemployment claims during the pandemic, and the multiple programs the UIA now has to track — Emergency Benefits, Pandemic Unemployment Assistance, Pandemic Emergency Unemployment Compensation, etc. — it is harder than ever to contact the Agency by phone. Your best bet may to be to contact the UIA by fax. A number should be listed on the letter you received. Depending on the amount of money involved, you may also want to contact an attorney.
The lawyers at GWINN LEGAL PLLC are experienced attorneys and are happy to answer your questions. Give us a call for a free initial telephone consultation about your legal needs. For consideration of your questions in our web column, please submit your inquiry on the “Contact Us” page of our website at www.gwinnlegal.com.
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ASK THE LAWYER
By: Daniel A. Gwinn, Esq.
Attorney and Counselor at Law
GWINN LEGAL PLLC
900 Wilshire Drive, Suite 104
Troy, MI 48084
(248) 970-0311 facsimile