22:17
Faizan
Under the Michigan Employment Security Act, a business owner, or someone who is self-employed, is typically not eligible for unemployment benefits. However, the courts have carved out an exception. At times, a person who sees himself as a business owner or independent contractor may, in actuality, have an employer-employee relationship in the eyes of Michigan courts, and may, therefore, be eligible for unemployment benefits.
Employer-Employee Relationship
There are various factors one must meet to qualify for unemployment insurance. One of them is to have worked in an employer-employee relationship. Business owners are usually self-employed, and, therefore, do not have an employer-employee relationship. However, Michigan courts have dictated that the actual work relationship, and not simply what the parties call it, is what matters. Using this standard, a self-employed business owner may have had an employer-employee relationship in effect and may be eligible for unemployment benefits.
Economic Reality Test
Michigan courts have indicated that the Michigan Unemployment Agency must look at the reality of the work situation, and not simply what the parties are calling it. Under this test, the agency must consider certain variables to determine this reality. The primary concern is whether the applicant for unemployment benefits was under the "direction and control" of another party. If the applicant is found to be under "direction and control," unemployment benefits may be available.
Factors Considered
The agency will ask whether the work performed by the applicant was an integral part of the business for which the applicant provided services. Also, if the applicant depended on the wages received for living expenses, this makes a difference. If the applicant provided all the materials for the job, it is more likely he was actually an independent contractor, and would not be eligible. However, if the recipient of the applicant's services provided these things, the applicant may have actually been in an employer-employee relationship, and may be eligible.
Example
The Michigan Unemployment Agency has provided a straightforward example of the difference between an independent contractor relationship and an employer-employee relationship. A business owner who claims to be self-employed as a painter, but actually works full-time for just one customer, and that customer provides all of the painting equipment and material, would likely have an employer-employee relationship and be eligible for benefits. However, if that same painter provided his own equipment and material, and worked for a few customers, he is likely an independent contractor and would not be eligible.
Employer-Employee Relationship
There are various factors one must meet to qualify for unemployment insurance. One of them is to have worked in an employer-employee relationship. Business owners are usually self-employed, and, therefore, do not have an employer-employee relationship. However, Michigan courts have dictated that the actual work relationship, and not simply what the parties call it, is what matters. Using this standard, a self-employed business owner may have had an employer-employee relationship in effect and may be eligible for unemployment benefits.
Economic Reality Test
Michigan courts have indicated that the Michigan Unemployment Agency must look at the reality of the work situation, and not simply what the parties are calling it. Under this test, the agency must consider certain variables to determine this reality. The primary concern is whether the applicant for unemployment benefits was under the "direction and control" of another party. If the applicant is found to be under "direction and control," unemployment benefits may be available.
Factors Considered
The agency will ask whether the work performed by the applicant was an integral part of the business for which the applicant provided services. Also, if the applicant depended on the wages received for living expenses, this makes a difference. If the applicant provided all the materials for the job, it is more likely he was actually an independent contractor, and would not be eligible. However, if the recipient of the applicant's services provided these things, the applicant may have actually been in an employer-employee relationship, and may be eligible.
Example
The Michigan Unemployment Agency has provided a straightforward example of the difference between an independent contractor relationship and an employer-employee relationship. A business owner who claims to be self-employed as a painter, but actually works full-time for just one customer, and that customer provides all of the painting equipment and material, would likely have an employer-employee relationship and be eligible for benefits. However, if that same painter provided his own equipment and material, and worked for a few customers, he is likely an independent contractor and would not be eligible.
Posted in: Business Insurance
