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How independent contractor can qualify for unemployment

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in Compensation and Benefits,Human Resources

Have you thought about converting employees into independent contractors to save money? Then make sure you tell them they won’t be eligible for unemployment compensation. If you don’t, they may be eligible.

Recent case: Heather worked as a painter until her employer encouraged her to resign, start her own company and then do the work as an independent contractor. She did … and the work dried up. She applied for unemployment, but the company argued she had quit.

The court said Heather was eligible because her former employer hadn’t informed her of the consequences of quitting and becoming an independent contractor—such as becoming ineligible for unemployment benefits. That was the equivalent of the employer giving Heather a good reason to quit, which made her eligible for benefits. (Rowan v. Dream It, No. A11-1135, Court of Appeals of Minnesota, 2012)

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