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Employers are Confused! How Can My Employees Both Work and Collect Unemployment Insurance Benefits from the IDES?!

April 2011

By: Nancy E. Joerg, Esq.

In this extremely challenging economy, many employers are cutting back on their employees' hours. Their employees are making a small enough amount of money that they are able to also collect unemployment insurance benefits from the Illinois Department of Employment Security (IDES).

In other cases, individuals have lost their jobs completely and have been able to obtain unemployment insurance benefits. However, in the course of collecting unemployment insurance benefits, these individuals may have been fortunate enough to obtain part-time employment. These employees worry about whether they will lose their unemployment insurance benefits because they are working part time and drawing a small income. How does this all work?

Yes, it is possible for an individual to legally and ethically collect unemployment insurance benefits from the IDES and still earn wages from a part time job.

Here's an example to show how it works:

WEEKLY BENEFIT AMOUNT: Stanley (fictitious name) lost his job several months ago. He has been collecting unemployment. His average Weekly Benefit Amount is $385 per week gross and $149 per week gross added to that for his dependents (his two children). Stanley's Weekly Benefit Amount of $385 is the part of Stanley's unemployment insurance which has nothing to do with his dependents.

CAN EARN UP TO 50% OF WEEKLY BENEFIT AMOUNT AND IT WON'T AFFECT UNEMPLOYMENT: Stanley can make up to half of his Weekly Benefit Amount and it will not affect his unemployment. Stanley's Weekly Benefit Amount is $385; half of his Weekly Benefit Amount is $192.

Stanley has found a job as a commission salesperson selling cosmetics. Under the IDES system for partial unemployment, Stanley can make up to $192 per week gross and it will not affect his unemployment So, if Stanley made $150 in a week in commissions for selling cosmetics, he can report that openly to the IDES as to wages he made in that week and it will not affect his unemployment insurance at all.

WHEN EARNINGS EXCEED 50% OF WEEKLY BENEFIT AMOUNT: If Stanley would earn $225 in commissions in a given week, that would affect his unemployment insurance benefits. For each dollar that is over the $192 (recall that the $192 is half of Stanley's Weekly Benefit Amount), he would lose dollar for dollar that amount of money from his unemployment insurance benefits. So, if Stanley made $225, then $33 ($225 minus $192) is subtracted from the $385 Weekly Benefit Amount in that week only.

INDIVIDUALS WHO ARE DRAWING UNEMPLOYMENT MUST REPORT EACH WEEK SEPARATELY: It is important to realize that the IDES has individuals who are drawing unemployment report each week separately so they can indicate if they are working (yes or no), and if they are working, how much they are earning in a particular week.

An individual can keep drawing unemployment until they go over a certain amount of money at which time they are taken off of the unemployment insurance roles. In Stanley's case, if he ever earned more than $385 in a given week (his Weekly Benefit Amount), he will be taken off the unemployment insurance roles. If he makes less than $385 thereafter, he would have to reapply for unemployment as if he were a brand new claimant.

When Stanley sells on commission, even though he is not paid his commission for several weeks or months down the road, he still should report to the IDES that he earned his commission in the week he actually made the sale (rather than saying that he wasn't working and not reporting this until several weeks or months down the road when he actually receives the check). This is an understandable source of confusion to many people and they do not know whether to report they are working when they are selling on commission (and they receive no actual check in their hand during that week).

If at all possible, the unemployment insurance recipient should report to Teleserv what the commissions will be for the sales they made in that week even though they won't receive payment for weeks or months down the road. Of course, in situations where the individual will not earn any commission unless the customer actually pays, that is a more complex situation and the unemployment insurance recipient should not report that they have earned money unless the likelihood that they will receive the money is a certainty.

As an attorney who assists employers with all kinds of employment law questions including unemployment insurance matters, I find that I am getting an increasing number of phone calls from confused employers who want to better understand how their employees can collect unemployment insurance benefits and still work for the company. This situation is being caused because there is an overall lack of work and lack of business in many companies, and their employees' hours are being dramatically reduced.

Questions or concerns? Call Attorney Nancy E. Joerg of Wessels Sherman's St. Charles, Illinois office: 630-377-1554 or email her at najoerg@wesselssherman.com.