Unemployment Insurance in California
The first portion of this article will cover lots of specific details regarding the Unemployment Insurance (UI) system in California. This information is identical whether the claimant is an adult or a minor. In California there is no minimum age requirements attached to benefits. For the purposes of this article, the word ‘you’ is interchangeable with ‘your child’.
The second portion (FAQ’s) will cover some of the specifics to minors receiving UI including a discussion of some of the concerns many parents have about how their child’s participation in the UI system is perceived by others.
The UI program provides financial benefits for workers who are unemployed through no fault of their own, who are able to, available for, and actively seeking work as instructed. Eligibility for receiving benefits is set by law. The Employment Development Department (EDD) administers these laws. You can find California’s UI eligibility requirements in the Unemployment Insurance Code. (Ref. Pg 1 – A Guide to Benefits and Employment Services booklet, EDD)
The first step in the Unemployment Insurance process is the employer payment of contributions into their reserve account.
UI Reserve Account
A reserve account is established when an employer first registers with the EDD and is assigned an account number. The account is a cumulative record of credits and charges. The activity is used to determine the employer’s annual UI contribution rate. The difference between the credits and charges is the reserve account balance. It may be positive or negative and is non-refundable.
Each year in December, employers receive a rate notice from the EDD, which tells them their rates for various payroll tax expenses for the next year. (Employers have additional contributions to taxes based on their employee earnings, which are an expected expense for the employer). An employer’s UI rate is determined by the EDD and is based on the previous contributions and claims made into their reserve account. The range for an UI rate is .1% to 6.2%. A new company will be given a rate of 3.4% to begin.
An employer will make UI contributions by paying their rate on the first $7,000 they pay to each employee each year. For example, if a company has a rate of 3.5%, they will send to the EDD $245.00 for each employee that earns $7,000 that year. If they had 100 full time employees, they would incur $24,500 of employer paid expense per year. These payments would be credits to the employers UI Reserve Account. These funds are not refundable to the employer EVER.
The second step is an out of work employee determining if they are eligible to make a claim.
This is the 12-month period of time that the EDD will use to determine UI benefits. All of the reported earnings for an individual are divided into quarters of the year.
- 1st quarter January, February, March
- 2nd quarter April, May, June
- 3rd quarter July, August, September
- 4th quarter October, November, December
An important factor in determining benefits is when you file a claim.
When you file a claim the entire quarter preceding your claim, will not be included in your benefit determination. For example.. if you file in October 2009, earnings reported in the 3rd quarter of 2009 (July, August, September) will not be included in your 12-month base period.
For the above example, the base period would begin July 2008 and go thru June 2009. If you are recently unemployed and it was your FIRST job, it will be several months before you may qualify for benefits.
After you file a claim the EDD will send you a Notice of Unemployment Insurance Award, if you qualify. By using the information in this article you could also reasonably estimate what your benefits might be prior to filing a claim. The EDD will take your Base Period (defined above) and see if you meet the following criteria:
If those earnings limits are met, you will be eligible for benefits. The calculation for benefits is based on the highest quarter in the Base Period. When you file a claim the EDD sends you a booklet that includes the payment table. For the purposes of this article, listed below are some sample benefit amounts.
- At least $1,300 earnings in one of the quarters, OR
- At least $900 in the highest quarter and a total of 1.25 times your high quarter earnings in the four quarters of your base period.
Earnings in highest quarter Weekly benefit
- 1001.00 $ 43.00
- 3016.01 $117.00
- 5018.01 $194.00
- 7020.01 $271.00
- 9022.01 $348.00
The least weekly benefit is $40.00 and the greatest benefit at this time is $450.00 (regardless of excess quarterly earnings). In 2009, the government also granted an extra $25 per week from the Federal government as a "stimulus payment", but there is no information available as to how long that will last.
A claim is valid for 52 weeks. The claim amount will be paid in 26 weeks however, if there are no additional earnings during the claim. (See also maintaining a claim below) At this point you should have a rough estimate of your eligibility and may wish to file a claim.
Filing a Claim
There are currently 3 methods available for filing an UI claim.
- File by telephone – Customers contact one of the call centers using a toll-free telephone number 1-800-300-5616
- Online application – eApply4UI on the EDD home page at https://eapply4ui.edd.ca.gov
- Paper Application – UI Application DE 1101 I - print, hand write or type answers and mail or fax to EDD for claim filing.
Most people use method 1 or 2. See more information about methods in FAQ’s below. The information you will need to file the claim is:
- Claimant name and social security number
- Address and telephone number
- Date last worked
- Last employer information – including addresses (this is VERY important) Note: This is usually the PAYROLL company, not the ad agency or the production company.
- Information on all employers in the last 18 months, including wages earned.
You will likely be asked some other questions pertaining to why the claimant is no longer employed. For the show business industry our plight is slightly different than more traditional employees. Keep in mind that the EDD is a government agency and they like things to fit into their standardized “boxes”—only answer the questions they ask, without giving them too much extra information There is additional information about some of the ‘usual’ questions in the FAQ’s below.
What happens with your claim?
After completing a claim form in one of the ways listed above, the EDD will compare the information with their records and immediately send a notice to the LAST employer letting them know a claim has been filed. This would be the way an employer could disagree with a claim if your conduct created your unemployment (if you were fired). They have 10 calendar days to respond. In only a few days you will receive mailings from the EDD, which include their booklet of information and also a Benefit Determination letter.
You have received correspondence from the EDD... now what?
Notice of Unemployment Insurance Award
This document must be reviewed carefully for accuracy and for content. Even if your claim has been approved you will want to look at the quarterly earnings and see if they are comparable to your earnings records. (this is a great way to find Social Security number errors in payroll reporting). You should also review the information and determine if you really wish to proceed with this claim. (See FAQ about stopping a claim).
There is a one-week waiting period that will be indicated on your letter. Once the EDD issues a check, they will notify ALL of the employers in your Base Period that a claim has been filed and they have the opportunity to dispute claims against them. They have 15 calendar days to respond. If there are no disputes, the claim is divided among the employers and will generate a charge to their individual employer reserve account. Information that you receive on this notice includes:
- Claim beginning date
- Claim ending date - (52 weeks from the claim beginning date). Benefits, if any, remaining on this claim cannot be paid after the claim end date. A new claim must be filed if you are still unemployed after this date.
- Maximum benefit amount - The maximum is 26 times the weekly benefit, or half of the total base period wages, whichever is less. When you have received the maximum award indicated here, you cannot file another claim until the claim ending date has been reached.
- Weekly benefit amount- the amount you will receive each week if you meet all eligibility requirements for the week.
- Total wages, listed by employer, by quarter for the 12 month ‘base period’.
- Indication of the highest quarter earnings – which were used for benefit determination.
Again, remember to review all the information that you receive from the EDD carefully. It is your responsibility to know what you are doing. Now the claim process has begun, but it will require attention and maintenance to continue smoothly.
Bi-weekly Claim Form
When you receive your first UI payments, attached will be a claim form that is pre-printed and is for the next 2 weeks. You must complete this form and return it in the mail in order to receive more UI payments. They supply an envelope with the claim form that is very important, as it is coded for their use.
The handbook you will receive gives very specific details about each section on the form, but generally it asks if you were available and seeking work each day.
You (the parent) should also sign the form… xxxxxx / Mrs. Xxxx (mother)
*Any mistakes or oddities on this form will likely trigger a phone interview (see FAQs section below)
Unemployment Insurance is taxable. Each Claim Form gives you the choice to have taxes deducted. It is recommended that you have taxes deducted. They will deduct 10% for federal taxes only. This claim form process is relatively straight forward… until the claimant works or gets a residual payment.
Earnings received during an Unemployment Insurance claim
The Claim Form asks that you report any work earnings the week that the work was performed regardless if payment was received that week. Even with our very unusual timing for receipt of checks, you should know the gross payment for a days work. When working, you may have to take some extra effort on the set to find out who the payroll company is going to be since you will have to report the job to UI before you get a paycheck.
When you report earnings, your unemployment amount for only that week will be reduced by 75% of the earnings. If that exceeds the weekly amount, you will not receive UI for only that week. (Remember you have 52 weeks to exhaust 26 weeks of payments. In the end you will still receive the same total amount of money, it will just take you longer than 26 weeks to receive all of the monetary benefit available. The only time this would not be the case is if you are not qualified due to excess earnings more than 26 weeks in the claim year).
After you report a workday, UI will send you a new “Notice of Unemployment Claim Filed”, confirming your last job. All you need to do is double check all the information and the claim will precede as usual. Residuals are handled in much the same way, however they do recognize that a great deal of time may pass between the issuance of a residual and the claimant having any knowledge of the amount. There is a specific form DE 4005 Rev. 1 that deals with residual payments and holding fees. You can access the form here: http://www.edd.ca.gov/pdf_pub_ctr/de4005.pdf
It is highly recommended that you keep a copy of each claim form, and certainly that you keep a copy of any claim form that you reported earnings or residuals on. It is important that you are certain you report earnings in a timely fashion, or the claim can be stopped due to fraudulent reporting. (and then other ugly things happen, but lets not go there).
Wow.. lots of details… and lots of questions yet to cover.
Q – I worry that others, including employers, will perceive this as something negative, or as a child ‘using’ the system?
A - This is the most common concern. Let’s review some important facts, and each person can make this judgment for himself or herself.
- Law mandates the UI process, and the law supports any wage earner qualifying for benefits regardless of age.
- The employer has paid into their reserve account for the child’s wages, just like all of their other employees.
- This is a VERY common and expected practice among adult actors.
- Given the volume it would be highly unlikely most of our children’s employers could possibly create some type of ‘blacklist’ and it would be illegal for them to discriminate based on that, as well. In fact, in the rest of the work force world, employers are encouraged to hire employees back in order to reduce their UI claims. Of course, we cannot say that it has never happened, but it would certainly take an extreme amount of effort and it is just not reasonable to think that the past employers care. They expect the claims, and pay into their reserve accounts to accommodate for them.
- Unlike other payroll related deductions, Unemployment Insurance is a ‘use it or lose it’ function. Once earnings are more than 18 months old, those earnings are not eligible for determining future benefits. It is not a situation where later in life the child will have greater benefits coming because of their earnings now. Making claims now will also have no effect on their ability to make future claims (again still as minors, and also later as adults).
- In all other business avenues, there is no ‘special treatment’ of minors – they pay income tax, union dues, and other expenses just like their adult counterparts. It seems unreasonable to decide that this perfectly legal benefit that they are entitled to is somehow ‘using’ a system.
- We do not advocate that UI be spent frivolously, or viewed as a wind-fall, but as we all know in this business it takes money to make money, and it may very well allow for classes, pictures, or other necessary items for pursuit of additional employment.
- Some argue that parents have a fiduciary duty to claim these benefits for their child, and to deny them of compensation because of unfounded fear of retribution is not making a sound business decision.
- In reality, the employer paid into their reserve account and even if they have surplus money in the account they can never get it back. If they have claims in excess of their reserve account, their rate will go up the next year. The maximum rate would mean they would pay $434 per employee per year. It isn’t that they are getting a bill from UI, and writing out a check and really regretting hiring the person who filed a claim.
- Lastly, it really is a personal family decision, and not anyone else’s business but your own!
Q – Is unemployment taxable?
A – Yes, it is taxable and you will receive a 1099-G at the end of the year. Please be aware that some tax reporting software programs view 1099-G income as unearned income, and this will generate an additional incorrect ‘kiddie tax’. This is far too complicated to go into here, but just remember that if you see that. it is incorrect and find an entertainment tax professional to assist you (or write to bizparentz.com and we will help).
Q – It seems that there wouldn’t be many minor children filing claims for UI. Does this usually go smoothly?
A – This is similar to the many other situations where child actors are a small sub-set of the rest of the world, and may require both some diligence and patience on your part. We generally recommend making a claim by phone… although that is the first test of patience, because it can take a very, VERY long time to get thru. The agent taking the claim will either think it is really ‘cool’ that a child is doing this, or try to tell you that they can’t, because that particular agent may never have encountered this situation before. For the “can’t” person – ask for their supervisor.
It is helpful to tell the agent that the child shouldn’t be on the ‘job seeking’ program. This triggers a whole different set of requirements. Filing online seems to automatically trigger things like mandatory attendance at job training facilities, etc. Of course, these things can all be handled later with a phone call. They really don’t want a 10 year old attending their job training!
They may ask a few unusual questions such as whether the child is a member of a union and what the number is. SAG and AFTRA are both members of the AFL-CIO, although they do not have “Local” numbers assigned to them. They do NOT seek work for their members, and they do NOT have a union unemployment program. Again...the UI agent is just trying to make your unusual situation fit into their standardized form. Be patient!
Another common problem is when school starts. There is a box on the claim form that asks if you started any schooling or training. If you check yes for that question, it will likely trigger a phone interview, because they will want to know if the claimant is still available for work if they are now in school. Same as the situation above, they may question the schooling, but keep asking for supervisors until you find one who understands the unique situation. One appropriate answer to the schooling and availability question is to explain that when a minor works, it almost always is during school time, and they attend school on the set.
Q- Help! They want a Phone Interview. What is that?
A-You may receive a notice that you have an appointment for a phone interview. Don’t panic – just be prepared to answer the questions truthfully and succinctly and it will turn out fine. They will normally hold up any checks for you until you complete this interview. This is a good time to get out the copies of your claim forms. Chances are, they are calling because there was a box left unchecked or some other information they didn’t understand on the claim form. It is also important that you don’t write additional information or send little notes with a claim form. All activity like that will cause your form to be ‘kicked out of the system’ and delayed. If you feel the need to communicate something, you will need to contact an EDD representative directly.
Before beginning the interview, the representative may ask if they can speak directly to your child (the claimant). They will likely ask the child if they work, if they understand that mom is filing for unemployment for them, and if it is OK for them to talk to mom about it. This is really not a big deal. The UI representative is simply trying to establish that there really is such a child, that nothing fraudulent is going on, and that it is OK to invade the child’s privacy by talking to someone else about their work life. It might be a good idea to prep your child for this little conversation and make sure they are home at the time of the interview. (If the interview is scheduled during school hours, there are provisions on the letter for how to change the appointment time). After the first time, the UI agent normally makes a note of the parents’ name and authorization to discuss the case in their computer.
Q – What if I file a claim, and it is approved, but then I decide I don’t want it?
A – This is known as “canceling a claim”. If you feel that you would benefit by waiting until a later date to file your claim, you may be able to cancel the existing claim. You can cancel the claim up to 30 days after the Notice of Unemployment Insurance Award as long as you haven’t cashed a benefit check, or had written notice of disqualification.
Q – Why would I decide to cancel a claim?
A – Given the nature of determining benefits, you may find when reviewing the earnings that will go into the base period, that by waiting for a higher earnings quarter to be considered your benefit amount will increase drastically. By waiting a few months or even weeks (you would need to file a claim in an entirely different quarter to make any difference in the calculations), you may be eligible for a much larger weekly benefit. However, if you need to utilize the UI system consistently, you would eventually gain the benefit of the larger earnings quarter. This would also be the case if you mistakenly filed a claim and your ONLY earnings were in the quarter preceding the quarter you file the claim. (Remember, that quarter is not included in the calculations.)
Q – I heard there is a 3 month waiting period? Is that true?
A – Yes and no. As we have already discussed, you must have earnings that were reported prior to the most recent completed calendar quarter. (ie..you file in the 3rd quarter – the 2nd quarter is not considered – so you must have earnings in the 1st quarter of that year, or in the 2nd, 3rd, or 4th quarter of the year before to qualify for any benefits). I know.. that just gets so confusing, but think of it this way… they need time to get earnings records and information from employers. It would be impossible for them to have an accurate reporting of a quarter, on the first day of the next quarter. Therefore, rather than have inaccurate information, they exclude that quarter.
So, if there have been earnings from only one job, you will be waiting AT LEAST 3 months to be eligible. If you have previously had reported earnings, the only actual ‘waiting period’ is the one week when you first file.
Q – What happens if you work or receive money during an UI claim time?
A – The bi-weekly claim form has an area to indicate any work performed or money received. There is detailed information available in the handbook and on the “Reporting Residual Payments” sheet, which is referenced below, about when and how to report the earnings. What will happen is that for ONLY the week that work is performed or a residual is received, the weekly benefit will be reduced, or perhaps there will be no benefit paid at all (because after all, you weren’t unemployed that week). Important things to know about this situation is that you should indicate in the “reason no longer working” section that this was a ‘day-player’, “one day job—job over” or whatever type of employment situation this is, so that they do not assume you have returned to work. Always keep in mind that the UI system is the same for every employee, and out in the ‘other’ world, working even one day would indicate you had a new job. Remember, even if you earned a great deal of money in one week, which often happens in this industry, only the benefits for that week are effected. Also remember to report the GROSS earnings before any deductions. If the gross earnings for the week are greater than $1,000.00 – you enter 999.99 on the form.
Q – I started a claim, and it has been more than 2 weeks since I received a check or a claim form?
A - It’s not time to panic yet. Review your records to see if you mailed in the previous claim form late. The one situation to note is that if your previous claim form did indicate earnings, sometimes this can trigger a ‘stoppage’ of the claim, even if you were good and wrote on the form that this was a one-time deal. If you feel that has happened, be aware that they don’t notify you of the stoppage; they just don’t send any more claim forms. You don’t want to let this go too long, if after 3 weeks you are certain something has changed about the process, you will need to call. If they stopped the claim, even in error, they will most likely ‘start it’ again, but you will have to supply information about your LAST employer again, and you may not get paid for the missing weeks if you wait too long to call and inquire about it.
Q - Is this really worth it?
A – That is a personal decision, but our industry often generates some very large earnings for children very quickly, and the time between job opportunities is always an unknown. The smallest award possible, $40 a week would mean $1,040 total benefits payable. The largest, $ 450 a week, would total $11,700. Keep in mind that the income is taxable to the child, and that there are record keeping responsibilities involved.
Q – I got a long term job during my claim. What happens?
A – Well congratulations!! You would no longer qualify or need the unemployment benefits and when you indicate the return to work on your claim form, the EDD will stop your claim.
Believe it or not, this has been a condensed version of the information available on this subject.
Important points to remember!
Keep accurate records of your child’s earnings and employment history (this applies to your responsibilities in other areas as well). Keep copies of the claim forms you submit, for your own records. This is vitally important if you indicate a workday or receipt of a residual.
Know that UI is taxable to the claimant, and plan for the tax liability. Again, it is highly recommended that you have taxes withheld each week and can indicate that on the claim form.
As is often the case with state run services, there are many checks and balances in place to determine and eliminate fraud. I don’t feel that those issues apply to my audience of readers, so I am not going to discuss that further. However, be aware that fraud will be watched for and you are only going to get so many honest mistakes before your claim starts to look fraudulent. There are specific details about fraud and penalties and prosecution in the handbook that will be mailed to you at the start of a claim. Please do not think that reading this article will replace your need to read the information sent from the EDD. This article purposely did not go into much of the detail that the EDD will provide, but rather focuses on those situations not specifically covered in EDD materials.
As always, if you have any other questions or concerns, or have experienced something different than what is outlined here within the UI process, please write to BizParentz.com and let us know!
Sources for this information and additional information are cited below: