I will keep this post updated as new information comes to light.
ISSUE
Many self-employed people from New York have asked about a letter they received in the mail from the Department of Labor. The letter is demanding self-employment proof from people receiving PUA.
MY OPINION
Remember, as with the rest of the site, I am not paid to give legal or financial advice. So, this is just my opinion. You are responsible for your own due diligence.
Receiving exactly $182
If you are receiving the PUA minimum of $182 then this letter is likely not meant for you and therefore you don’t need to send anything to them. I do recommend keeping proof of prior self-employment in case you get audited (or asked again), for example, a list of income and expenses. I just don’t think that you currently need to send anything in as a response to this letter.
Receiving more than $182
The letter is really meant for those who are getting more than $182 a week. If you haven’t submitted proof (1099 / Schedule C) to substantiate your higher-than-$182 PUA benefits, then yes, I think you need to submit that proof to the DOL.
MY REASONING
Two lines from the letter helped inform my opinion:
- “… Failure to provide this information may cause your PUA benefit rate to decrease…”
The minimum amount of PUA is $182, hence this wording must refer to someone receiving more than $182 a week. - “... The PUA rate of a self-employed individual who has no net earnings during the base period will also be one-half the state’s average weekly UI benefit amount. Currently, the minimum rate is $182…”
This is clearly stating that even if someone had no earnings at all during the base-period, the rate is still $182. The ‘base-period’ is the period of prior employment earnings that the DOL looks at in order to determine the weekly unemployment rate. So if you are getting $182 a week, which you would be eligible for even with $0 earnings, why would you need to submit proof of your self-employment earnings?
ENJOY MATH? READ ON…
People asked me why the letter stated that the benefit rate is based on an earnings amount that they did not report?!
The numbers on the letters were one of the following:
- “…Your weekly benefit rate is based on earnings in the amount of $9,464.00“
- “…Your weekly benefit rate is based on earnings in the amount of $14,196.00“
- “…Your weekly benefit rate is based on earnings in the amount of $18,928.00”
None of the above numbers reflect what these people earned and reported to the DOL.
Then there are those that have a higher amount than $18,928, hopefully actually based on the amount that was reported to the DOL.
Here goes…
First, some numbers:
$4732 X 2 = $9,464.00
$4732 x 3 = $14,196.00
$4732 x 4 = $18,928.00
And what, you may ask, is significance of the number $4732? Well, read on…
50% or prior earnings
The unemployment system is set up to calculate your income based on 50% of your prior earnings.
The way it’s meant to work is: they divide your 2019 earnings by 52 to arrive at your weekly earnings from 2019. They then divide that amount in two, which gives you 50% of your 2019 average weekly earnings as your weekly unemployment payments. For example, $40,000 earned in 2019, divided by 52 weeks, equals $961.54. 50% of $961.54 is $481. So the weekly benefit rate would be $481 (+ $600 for April-July).
If you earned $18,928 in 2019, you would receive exactly $182 a week in PUA. Why? Because $18,928 divided by 52 (weeks in the year) is $364. 50% of that is $182.
Now, what happens if you earned less than $18,928?
Minimum PUA is $182 a week, even with little or no earnings. The 50% rule is only for earnings that would get you over $182 a week. So if you reported earnings from 2019 anything from $0 until $18,927, you would still get $182 a week, but now it won’t be 50% of prior earnings. It will be more than 50%.
The old NY unemployment system can’t seem to handle having someone receive $182 if that is more than 50% of his earnings. So what should be done? Simple! Anyone who is getting PUA automatically gets listed as having earnings of $18,928 a year, even if in reality they earned much less or in fact nothing at all. That way the person gets their $182 and the system is “happy” being that the person is getting “50% of their prior earnings”.
Quarters
To make things slightly more complex…
The DOL divides the year into quarters of three months each. For regular unemployment, a person gets payments based on how much was earned in a quarter (three months). So instead of dividing a yearly salary into 52 then again in 2, they divide a quarter into 26 and that’s your weekly benefit rate.
So, anyone who was approved for PUA with a reported 2019 income of $18,928 or less (18,928/52/2 = 182) was automatically listed as having earned $4,732 in the previous four quarters, being that $4,732 / 26 = $182
WHY DIFFERENT AMOUNTS?
I don’t know why there are three different versions of “Your weekly benefit rate is based on earnings in the amount of …”.
All the numbers are products of $4732, so that makes sense. I don’t know why some letters have 2x$4732, some have 3x$4732 while others have 4x$4732.
In order to get regular unemployment, you need to have earnings in at least two quarters, so that explains why some letters show the $9,464 number. Being that the “system” needs to see earnings in at least two quarters in order to pay unemployment.
The $18,928 number also makes sense if the system puts in the numbers for the whole year (4732 x 4).
$14,196 is three times the $4732. Why 3 times? I don’t know.