Ask The Lawyer, Will Part Time Work Make Me Ineligible For The Extra $600?
ASK THE LAWYER
By: Daniel A. Gwinn, Esq.
Attorney and Counselor at L
GWINN LEGAL PLLC
901 Wilshire Drive, Suite 550
Troy, MI 48084
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WORKER WANTS TO KNOW: WILL PART-TIME WORK MAKE ME INELIGIBLE FOR EXTRA $600 PER WEEK IN UNEMPLOYMENT BENEFITS?
QUESTION: I was laid off when the company I work for decided to shut down because of the coronavirus. I had been doing some unrelated freelance work a few hours a week at home, and that work continues. Can I receive unemployment benefits from the state, even though I’m still earning money from my freelance job? And am I eligible for the extra $600 per week in benefits that the federal government is giving to unemployed workers?
ANSWER: If you are eligible for unemployment in Michigan, you can receive benefits and work part-time. But, there are conditions. The benefits you receive will be reduced by 50 cents for each dollar you earn through your part-time work, and, if you earn more than 1 ½ times your benefit amount, you are not eligible for benefits that week.
The maximum benefit amount, which is based on your earnings during the four quarters completed before your layoff, is $362 per week (low-wage workers may receive less). If you earned $200 from your freelance work, your benefit amount for that week would be reduced by $100 — to $262. If you earned more than $543 from your freelance work, you would not be eligible for benefits.
Now, on to the next question. Under the federal Coronavirus, Aid, Relief, and Economic Security (CARES) Act, eligible unemployed workers will receive an extra $600 per week in benefits through July 2020. If you are eligible for benefits under Michigan law — even if the amount is reduced by part-time work — you remain eligible for the full $600 additional payment. According Michigan’s Chamber of Commerce a worker could be eligible for benefits as low as $1 per week, but still receive the $600.
While some freelance workers in your situation might be tempted to cut down on their work to remain eligible for unemployment benefits — no matter how reduced — in order to receive the $600 payment, that approach may backfire, costing the freelancer business later on from clients whose work was rejected, and possibly exposing the freelancer to fraud penalties in the CARES Act. Section 2104 (f) of the Act allows criminal prosecution for fraud and subjects the unemployed worker to the penalties of state law (which, among other possible penalties, requires repayment of the sum improperly received plus “damages equal to that amount”).
In addition to providing unemployed workers an extra $600 per week through July, the CARES Act allows workers to receive benefits for an additional 13 weeks, and extends benefits to self-employed workers, gig workers and independent contractors. Some of these workers are seeing the state portion of their benefits erroneously reduced. Although they receive the bulk of their income from self-employment, their state benefit amounts reduced are being calculated on any W-2 earnings the worker received, no matter how small. While the unemployed worker still receives the extra $600 per week, the underlying state benefit amount may be drastically reduced.
Last month, with Executive Order 2020-24, Michigan Gov. Gretchen Whitmer extended the benefit period from 20 weeks to 26 weeks (with the 13-week extension from the CARES Act, unemployed workers in Michigan may now be eligible for benefits for up to 39 weeks), allowed workers 28 days after layoff to file a claim and excused the requirement that workers remain able, available and looking for work in order to receive benefits.
The Executive Order also extends unemployment benefits to workers who leave work to self-quarantine, have been exposed to a person diagnosed with COVID-19, show symptoms of COVID-19, have to take care of someone diagnosed with the disease, or have a family care responsibility “as a result of a government directive.”
But, while unemployment benefits are better than ever, filing a claim has become more difficult. Despite quadrupling the size of is call center staff and increasing the capacity of its online filing system, the Unemployment Insurance Agency has struggled to process the flood of claims: nearly 1.2 million applications in the five weeks ending April 23. According to an Associated Press report, 17 percent of Michigan’s workforce is now receiving unemployment.
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