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  • Continue to collect UI after starting new business? Massachusetts

    I'm on UI right now. Been looking for a job, but haven't found anything.

    Question - if I were to start my own business now (and form an LLC), am I eligible to continue collecting unemployment, even if I were looking for a job full time and doing my own business part time (building a software prototype until it is ready for public release)?

  • #2
    That depends entirely on how much time you spend working on the new business.

    I was looking into starting my own business while I was collecting UI (in MA) a few years ago, and the DET told me that there was a limited number of hours I could work at my business. I don't remember what the number was (I think it may have been 20) but the DET considers that if you're working more than that at the new business, you are not putting sufficient time into looking for work to qualify for benefits.

    You'll have to check with them as to exactly what the number is, unless rjc or Phil (CompensationCounsel) knows.
    The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.

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    • #3
      So how would they know if I worked X hours on the new business vs. Y hours?

      Also, would providing my SSN to form an LLC trigger a DET investigation on my UI claim?

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      • #4
        When a company hires a new employee, the company is required by law to report the new hire to the state (i.e. New Hire Reporting). This is how UI would be notified. Most likely UI would send a questionaire to the new employer which would request information on hours worked and compensation paid.

        Here is a link explaining how New Hire Reporting works in Massachusetts:
        http://www.cse.state.ma.us/programs/newhire/newhire.htm

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        • #5
          Well, unless you're planning to lie to them and risk committing unemployment fraud, you're going to tell them.

          Unless things have changed in the last few years, they can AT ANY TIME require you to provide the log you're required to keep of your job search. If they suspect that you're not putting in the time because you're too busy settting up your business, you can bet they will, and you can bet it will be scrutinized.
          The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.

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          • #6
            No, not planning to lie or deceive in any way. Just trying to figure out flags that would cause me more headache than it's worth.

            Called the unemployment office and local career offices. No one seems to know the X hours allowed to work on the new business. They just said "full-time" job search as the requirement for UI benefits.

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            • #7
              I am not aware of a specific # of hours that a claimant would be limited to if he/she had his/her own business, although it makes general sense that something such as that exists.

              The DUA website, which is really not very good, offers no information on this issue.

              My advice is be honest and completely forthcoming with any information pertaining to your job search including that information that may pertain to starting your own business.

              In recent years the DUA has stepped up its fraud investigations, which can result in many penalties including stopping benefits; paying back benefits; and/or monetary fines.

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              • #8
                I was unquestionably told by the DET, as it was then, that there was a definite and specific number of hours, and I'm about 70% sure it was 20, but that was a few years ago.
                The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.

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