Finding answers to questions about unemployment in California is a job in itself – San Francisco Chronicle
With the state unemployment rate shooting up above 15%, it’s not surprising that readers seem to have endless questions about jobless benefits, especially the new federally funded Pandemic Unemployment Assistance for self-employed and other people not eligible for regular state unemployment insurance. I’ll try to answer — or at least address — some of the most common questions below.
Q: I’m self-employed and got a Paycheck Protection Program loan. Can I use that loan to pay myself and collect unemployment at the same time?
A: No. You cannot collect unemployment for weeks you are being paid from the loan proceeds, said Shannon Farmer, an employment lawyer with Ballard Spahr. However, you could collect pandemic unemployment assistance for weeks before and after you are being paid with a PPP loan, provided you lost work because of the coronavirus and meet other requirements.
Note that to get a PPP loan forgiven, at least 75% of the loan proceeds must be used to cover eight weeks of payroll and benefits. If you are self-employed, the amount you can spend on your own payroll costs is limited to eight weeks of your 2019 average earnings, Farmer added.
Q: I’m a self-employed Airbnb host and lost all my bookings because of the coronavirus. Can I collect Pandemic Unemployment Assistance?
A: The California Employment Development Department has declined to answer this. On its website, Airbnb says some hosts “who operate as self-employed individuals or sole proprietors may be eligible for this assistance.” But it couldn’t say whether any states have specifically approved it for people running short-term rentals.
Dwayne McKenzie, an attorney with Cox Castle Nicholson, said that a property owner who lost rental income likely would not qualify for pandemic assistance. Whether an Airbnb host would qualify “is in a potential gray area and unclear. I could make arguments both ways.”
Pandemic assistance “is not intended to cover loss of income, per se. There has to be a connection to labor, to work,” said Carole Vigne, an attorney with Legal Aid at Work in San Francisco. If someone’s job is managing one or more short-term rentals — including scheduling, cleaning, greeting, etc. — they might qualify.
Given the lack of clear guidance, and the understanding that pandemic assistance “is to be applied broadly,” Vigne said that if there is a chance you could qualify, you should apply.
Laura Thompson, an Airbnb host in San Francisco, said she applied for pandemic benefits and “was granted approval for the minimum weekly amount.” For her occupation, she chose “Supervisor Hospitality House” from the list of options, because it was the closest thing she could find to short-term rental host. She wrote on her application that she had a short-term lodging business, licensed by the city, “where I host travelers from out of the area and all is nonessential travel and all my reservations canceled.”
Q: What if I get unemployment and EDD later decides I was not eligible?
A: EDD may assess an overpayment and ask for the money back. If EDD believes you intentionally made false statements, you could face a 30% penalty and forfeit future benefits. However, these decisions can be appealed. “Providing information you believe is correct but EDD doesn’t believe is correct doesn’t make it a false statement,” Vigne said.
Q: The unemployment application asks if I am “attending” school. If I’m taking classes online, am I “attending” school? If I say yes, can I still collect benefits?
A: To collect unemployment benefits, you must be available for work. “Technically, attending school under normal circumstances would create a red flag in their system and trigger an interview,” said Vigne. “If you are not working, and enroll full time, you are likely not available to work. EDD has a problem with that, unless you are enrolled in a California training benefits program.” This program lets you attend an EDD-approved school or training program while you receive unemployment benefits.
Vigne said she would answer the question yes, “and if they follow up with an interview, which is what they are supposed to do,” explain how your schooling does not prevent you from working the same number of hours you did before. If EDD denies you unemployment, you can appeal.
Q: The online application asks, “What is your annual income for calendar year 2019? If you are a business owner, self-employed, independent contractor or gig worker provide your net annual income for calendar year 2019.” Where on my tax return do I find my net income?
A: The application doesn’t say and neither would EDD. In a Q&A on its website, EDD says, that for self-employed people, “the law requires that the EDD look at your net income, total after taxes, to determine your PUA weekly benefit amount.”
Common sense would suggest that self-employed people who report their business income on Schedule C would use line 31, net profit or loss. However, this is a pretax number, which is transferred onto Form 1040, where people calculate their tax on all income combined, including from a spouse’s job and investments, after all deductions unrelated to business.
Charles Sterck, a San Francisco CPA, said he is advising clients to use line 31 on Schedule C as their net income figure “and ignore any request for ‘after tax’ amounts.”
Note that employees who qualify for regular unemployment are asked for their gross earnings, not net.
Q: If I’m able to earn money while I’m on unemployment, can I still collect benefits?
A: Every two weeks, people collecting regular or pandemic benefits have to fill out a “certification” form. It asks if you were able to work, looked for work, refused work and worked or earned money during each of the past two weeks. People collecting regular unemployment are supposed to say whether they worked that week, even if they haven’t been paid. If you worked the last week of May, but don’t get paid until June, you still report that you worked the last week of May, Vigne said.
For any week you worked, if you made more than $100, EDD will deduct 75% of your pay from your basic weekly benefit (excluding the extra $600 per week being paid through July under the Cares Act), according to Vigne.
For example, if you are collecting the maximum benefit of $450 per week, and you earned $400 that week, your unemployment benefit will be reduced by $300, to $150. If you made $100 or less, EDD will ignore the first $25 and subtract the rest from your basic benefit.
As long as your basic benefit stays above zero, you will still collect the extra $600 per week through July, Vigne said. If it goes below zero, you won’t get the $600 that week.
This formula is the same for pandemic benefits, except the certification form that says if you are self-employed, “report earnings during the week you receive the money,” not when you earned it.
Note: Normally you must look for work each week to continue receiving benefits, but given the “lack of available work created by COVID-19,” EDD says “you will not be penalized if you answer ‘no’ to the question about looking for work.”
Also, EDD suspended certifications for the weeks ending March 14 through May 9, but now they’re required again.
To speak to an EDD service rep who can assess your claim, call 800-300-5616 on weekdays from 8 a.m. until noon.
To speak to a rep who can provide general information, call 833-978-2511 from 8 a.m. to 8 p.m. seven days per week.
For an automated self-service line, call 866-333-4606 anytime.
For FAQs on pandemic benefits, see https://bit.ly/eddcoronavirusfaq.
For FAQs on coronavirus-related unemployment benefits, see https://bit.ly/cacoronavirusbenefits.
For tips on filling out the application, see https://unemployment.edd.ca.gov/guide/benefits.
Q: If I work while I’m unemployed, and it eliminates my unemployment that week, do I lose that money forever or is it added onto the end of my claim?
A: Normally, if you zero out, that week doesn’t get lost, because you can collect 26 weeks of regular unemployment over the course of 52 weeks, Vigne said.
People who exhaust 26 weeks of regular unemployment insurance can get an extra 13 weeks of benefits under the Cares Act, for a total of 39 weeks. This program is called Pandemic Emergency Unemployment Compensation or PEUC. To see when the extra weeks will become available, see https://bit.ly/EDDPEUC.
The Cares Act provides a total of 39 weeks of pandemic benefits through Dec. 31.
Separately from these benefits, California’s unemployment rate recently rose enough to trigger an additional 13 weeks of benefits for people receiving regular (but not pandemic) benefits, bringing their total to 52. “Now that one can collect up to 52 weeks, there is a risk that EDD will try to open a new claim after the year mark, instead of rolling over the remaining benefits,” Vigne said.