UNEMPLOYMENT INSURANCE - SELF EMPLOYMENT

A few recent consultations have revealed that there may be an issue of whether, among other possible facts, the maintenance of a blog or website or other social media group constitutes self-employment and thus disqualifying UI benefits. Here is a story reported from Forbes just a few months ago but and one must remember that each case has its own peculiar facts:

"Blogger's Unemployment Benefits Reinstated After AdSense Fiasco
David K. Randall, 10.15.09, 4:00 PM ET

A blogger who lost her unemployment benefits after making a dollar a day through Google AdSense had her weekly checks restored yesterday. The New York Department of Labor reversed its stance that her blog constituted work, but it still does not have a policy for how to classify blogging that produces income.

As Forbes first reported, Karin, a 2008 graduate of the University of Virginia School of Law, applied for unemployment benefits after she was laid off by a New York City law firm six months into her job. She started a food blog to build a writing portfolio in hopes of attracting employers and made $238.75 over six months through Google AdSense, a service by the Web search company that pays bloggers to host ads on their Web sites.

When she reported this income to the New York State Department of Labor, she received conflicting advice about whether this income constituted work.

According to state regulations, anyone receiving unemployment benefits who works one day and earns less than $405 will have his check reduced by 25%. However, the state does not regard "residual income"--meaning payment for services previously rendered--as work that would affect a person's eligibility for unemployment benefits.

The state suspended Karin's weekly unemployment payments while it conducted an investigation into her "business," and Wednesday determined that the income was indeed residual.

"When the claimant brought the issue to the department's attention, the department went through the normal process to determine if the claimant was involved in any business activity," a Department of Labor spokesperson said. "Based upon the responses, it was determined that the income received was "passive" income and not directly related to a business activity, which is why her benefits were reinstated."

One key to the state's ruling was that the blog was essentially written as a form of self-promotion rather than being a for-profit enterprise. If Karin accepts money from restaurants in exchange for writing about their establishments, however, her blog will be viewed as work in the state's eyes, and she could become ineligible for unemployment benefits.

Karin says that the Department of Labor told her that she no longer needs to report her AdSense income. However, she is waiting to receive a guarantee in writing before she puts ads back up on her site."