N.J. labor commissioner answers questions from owners, independent contractors on unemployment benefits

By Tom Bergeron
New Jersey | Apr 23, 2020 at 6:00 am
Special Report

Questions: There are so many questions around unemployment insurance benefits.

ROI-NJ went to the source for the answers, moderating a webinar with Robert Asaro-Angelo, the commissioner of the state Department of Labor & Workforce Development.

The webinar was sponsored by the New Jersey Chamber of Commerce and Withum.

We broke up Asaro-Angelo’s answers into three parts:

Questions pertinent to employers/independent contractors

Q: Let’s start with the pandemic unemployment assistance program. Give us the big-picture view?

File photo
Labor Commissioner Robert Asaro-Angelo.

Robert Asaro-Angelo: The most important piece to note here is that this is for folks who are not part of the unemployment insurance system in the traditional sense. They were either a business owner or an independent contractor. They weren’t W2 wage earners, so they weren’t paying premiums on unemployment insurance.

The process works differently.

Q: Walk us through it.

RAA: It’s counterintuitive, but the first step is that you need to be found ineligible for the traditional unemployment benefits, which means you need to go through the process of filing for unemployment and being denied. If you go through the PDF on our website, you’ll see a step-by-step screenshot guide with more answers to your questions about that process.

(View the PDF here.)

Q: Will the process be quick and easy?

RAA: Unfortunately, no. There are new sets of rules for the pandemic unemployment assistance, which aren’t even up yet. But, let’s be very clear: We want to get the money out as soon as possible. This is 100% fully federally funded. So, it is in our best interests of the state and our unemployment trust fund, which every employer in the state and every employee pays into, to have as many people claiming pandemic unemployment assistance as possible. It’s just going to take a little time to go through that process because of the way it was written.

Q: Are sole proprietors and independent contractors entitled to these benefits?

RAA: Yes. And this is exactly who the pandemic unemployment assistance program was created for. The goal of the program is to get benefits into the hands of self-employed, independent contractors who were not eligible for the traditional benefits.

Q: I’m trying to keep my employees whole, but I don’t have enough money — or work — to keep them full time. Can I cut my employees’ hours and pay, and have them make up the difference through partial unemployment? Is something like that allowed, or am I gaming the system? It just feels like I should not be punished for trying to keep people on, even part time.

RAA: You’re not gaming the system. That’s something that we call a workshare. Some people know it as short-term compensation. You need to email our department about setting up your workshare program, where basically the employer fills out a form with us — they submit what percentage of hours they’re going to be reducing. In New Jersey, this is only available for employers who have 10 employees or more, and the reduction has to be between 20% and 60%.

Employees would get unemployment benefits — and they would be eligible for the additional $600.

(Click here for more information.)

Q: Companies with fewer than 10 employees are not eligible for this?

RAA: Correct.

Q: How do you count employees? Do they have to be ‘full-time’? What is the definition?

RAA: Employees are those who work no less than 1,500 hours a year, which is approximately 30 hours a week.

Q: Am I allowed to furlough my employees for one week and then bring them back — and do this continually? Maybe on one week and off two or three, depending on how much need there is for them?

RAA: Yes. Employees would just need to certify which weeks they are working and which weeks they are not. I’m not going to lie; it might not go through as a clean claim. They might have to have been in touch with somebody. But we deal with things like this all the time.

Q: If I have people who have to stop working, does it matter if I say the employees have been furloughed or been laid off?

RAA: Not as far our filings go. At the beginning of this crisis, we heard from some employees who were being told they had the option to become voluntarily furloughed, that they can keep their benefits, but they wouldn’t get paid. In that situation, they wouldn’t be eligible for benefits, because they were volunteering not to work. But, if it’s the employers saying that you are furloughed or you are laid off, we treat that the same way. They are being terminated, even temporarily.

Q: If I get the PPP loan, but my furloughed employees don’t want to come back to work because they’re getting more on unemployment, what is my recourse?

RAA: Employees who refuse available work are ineligible for unemployment. But we are in touch with employers, so you can let us know that somebody is refusing to work. If that’s the case, there will be an adjudication hearing and we will reach out to that employee, letting them know that they have work available to them and ask why they are still trying to collect unemployment.

Q: I am the owner of a company where employees are unable to work from home. I have some employees who cannot work from home because of child care issues, now that their children are out of school. When they exhaust their COVID child care leave, will they be approved for unemployment because they are unable to get to the job?

RAA: They should be. After they exhaust their 10 weeks of the federal Families First Coronavirus Response Act, they should be eligible for UI benefits. If you go to NJ.gov/labor, there’s a link on the right side that says update in benefits for New Jersey employees. It goes through 12 different scenarios.

(Click here for the PDF.)

Q: I’m the owner of a business and I pay myself as a W2 employee through payroll, just like the rest of my staff. What unemployment benefits are available to me as the owner? Is there any difference

RAA: If you’re paying yourself through a W2, you’re entitled to the same as everybody else.

Q: What if the co-owners of a business are a married couple and they are drawing salaries — due to declining revenue, they’re now only taking one salary and the second person has been laid off. Can that second person claim unemployment?

RAA: Most likely, yes. If they’re paying themselves with W2s, it will be easier to go through the normal process. If they’re not, they could definitely file for the pandemic on employment assistance.

Q: Can partners in an LLC apply for unemployment? And can corporate officers apply for unemployment? Is there a difference?

RAA: I think it depends on how your corporation is organized. If they are paid with W2s, they likely would be eligible for the regular benefits. If they are not, they likely would need to go through the pandemic unemployment assistance program.

Q: Can you apply for unemployment if you’re retired, getting Social Security benefits and work part-time as a 1099 employee, perhaps as an Uber driver?

RAA: You’ll be eligible for pandemic unemployment assistance. As I mentioned earlier, you should start that process by filing for unemployment and getting denied. I know it sounds counterintuitive, but that’s the first step to receiving pandemic unemployment assistance, because you will not be eligible for regular unemployment insurance as a 1099 independent contractor.

Q: Do you think that there is going to be an increase in the SUI rate for employers, due to the increased number of unemployment claims?

RAA: I am hopeful that is not the case. I know a lot of folks are concerned about their ratings. I just want to make clear that my goal is that no employer in New Jersey has their experience rating go up because of COVID-19-related reasons. A lot of the CARES act and the new programs give us the flexibility not to charge employers because of that. That is our full intent, but, to be completely honest, we haven’t gotten there yet.

That’s something for down the road, anyway. Those numbers and those experience ratings get calculated at the end of March every year. So, it’s not something I need to worry about until 2021, anyway. And, so, that’s not something we focused on, but it’s essential to us and every employer in New Jersey that our goal — again — is that nobody has any kind of penalty for their experience rating.

Q: I’m an independent contractor, self-employed. I received an automated email from the DOL stating my claim was processed, but when I go to the check the claim status page, it says pending. Is that normal?

RAA: I believe that email would have had instruction on what to do based on what it says on the claim. In some cases, maybe we have some W2 records from them from something somewhere. But, otherwise, most of the folks in that universe will be hearing back from us shortly about the pandemic unemployment assistance program and how to go forward with that.

Q: Will there be training grants available to train new employees?

RAA: Yes, the Department of Labor has lots of money for job training. We have all kinds of options. Go to nj.gov/labor and to the employers’ portal for how to access training funds for on-the-job training. And we’re trying to switch some of our training funding for online virtual training programs. But, if there’s an employer who has a need right now, we are definitely eager to help them as much as we can.

Read more questions and answers from ROI-NJ: