Earlier this month, I posted a column that included some of the absurd counter employment administrative regulations that states impose upon compensation recipients. It garnered a good deal of emotional commentary that revealed the rather wide discrepancies that exist from state-to-state regarding how much money recipients may earn from part-time employment and its impact on unemployment compensation. The plot thickens.
My fiancé, let's call her Marie, is unemployed for the first time in 38 years and receives unemployment compensation through the State of Pennsylvania. She's permitted to earn $220.00/week without having her compensation amount reduced and was offered a part-time job this week that would enable her to do so. After waiting on hold for 45 minutes to speak with a PA unemployment counselor to confirm this allowance, the counselor explained that she could indeed accept the position without penalty so long as she was paid through a traditional payroll system with deductions. Upon explaining that the prospective employer intended to pay her the gross amount weekly and issue a 1099 Miscellaneous Income statement at year's end, the counselor said that if she took the job she would be audited by the state in 2011 and likely have to repay 100% of compensation received during the weeks worked.
The upshot of this scenario is that the state trusts a person to work under a payroll system, but if you're an independent contractor you cannot be trusted to report all your income and therefore forfeit unemployment compensation. The further implication is that if one is an independent contractor, that status is equivalent to being employed full-time.
The prospective employer has since suggested that Marie work fewer hours than originally planned and offered to pay her without issuing a 1099. This would put Marie in the position of committing fraud when she registers for compensation benefits each week and declares that she is not working.
This job would be a great morale booster and offers tremendous networking advantages toward full-time work. Marie can take the job as originally offered and lose more than twice what she would earn, take the 2nd offer and lie, or turn down the job. What would you do?