The afternoon I lost my job, I hopped on the Web site for the Pennsylvania Department of Labor and Industry and filed for unemployment pay. About a week later I got a letter saying I was entitled to $352 in benefits each week I was out of a job. I could receive part of that if I earned between $141 and $493 during a given week.
My next step was to start looking for work as a freelance writer, which many out-of-work journalists do. It would add a few lines to the resume I’ve since sent out more times than I care to count, connect me to new editors and allow me to learn more skills. The money would be helpful too, of course. And although it hasn’t happened yet, maybe freelancing would lead to a job on someone’s payroll.
I didn’t expect it to cost me my unemployment benefits.
But the last week of July, the $634 the state had been depositing in my checking account every other week didn’t show up. When I called Labor and Industry for an explanation, the representative told me I wouldn’t get any more unemployment compensation because I became self-employed after writing my first freelance story in June.
My husband and I had to take money out of our savings account to pay July’s bills. Without his income I might not have been able to cover the rent.
This section of state law was my downfall:
An employe shall be ineligible for compensation for any week . . . In which he is engaged in self-employment
Indeed, the packet of information I received after filing for benefits includes this paragraph:
You may be ineligible for benefits if you are self-employed, setting up a business, or have ownership interest in a business. However, you may be entitled to benefits if you are engaged in a sideline business prior to becoming unemployed from your regular employer, report that you operate a business to the UC Service Center when filing your initial Application for Benefits, do not substantially change your participation in the sideline business while unemployed, and do not derive a primary source of livelihood from the sideline business.
I didn’t understand. I hadn’t become a freelancer because I wanted to, but because I lost my job. I wouldn’t object if the state didn’t give me unemployment pay during weeks where I earned more than $493, but most weeks my earnings fell below that threshold. I faithfully filed for benefits every two weeks, reporting every dollar of income I earned even if the checks wouldn’t come for a few months.
In August I received another letter from Labor and Industry. This one said I owed the state $897, plus interest, in unemployment benefits I had wrongly received after I began freelancing. The envelope included an “Agreement of Restitution” to send with my check. If I didn’t repay the $897, the letter assured me it could get it back by putting a lien on my property or throw me in prison.
I was livid.
Here I was, trying to make an honest living without hiding anything from the government, and the bureaucracy was treating me like as if I had deliberately defrauded Pennsylvania’s taxpayers. The state clearly wanted me to find a full-time job, but I was being punished for using freelancing as part of my search for one.
Stephen Pincus, a Pittsburgh attorney who focuses on employment law, said this isn’t an isolated case.
“It’s, without a doubt, not fair,” he told me recently. “It happens a lot with attorneys who get terminated from their firms and they hang out their shingle.”
And Pincus corrected my misunderstanding that I became ineligible for unemployment pay once I turned in my first freelance article. Actually, the law says I lost eligibility once I told someone I was willing to work as a freelancer – which happened sometime April 30.
But I wouldn’t have lost my benefits if I’d started freelancing while working for the Reading Eagle and kept up the same level of sideline income after my layoff. Pincus said the state views those situations the same way it would if a person had two part-time jobs and lost one.
I called Labor and Industry for an explanation spokesman David Smith refused to offer.
“That’s the law,” he said more than once.
So what’s my advice for others who aren’t working on the side, get laid off and can’t afford not to get regular income? Whatever you do, don’t freelance. Catch up on your DVDs while you look for a job.
Pincus said the only way to eliminate this problem is to change the law, which hasn’t been updated in about 60 years.
State Rep. Tim Seip, a Democrat who sits on the House’s Labor Relations committee, said he’d never considered situations like mine until I called him for his take. But he agreed my loss of benefits didn’t make sense.
“You’re going from being an employee of a business to a business owner by default,” Seip said. “I think maybe there should be a different category, like an involuntary transition.”
Republican state Sen. Mike Folmer, who sits on the Senate’s Labor and Industry committee and happened to be my state senator when I got laid off, said Pennsylvania’s unemployment compensation laws have to be fixed. But legislators have to be careful when they do that. For one thing, he said reforms need to guard against people who game the system, like school bus drivers who collect benefits each summer.
He and Seip agreed that I didn’t get the right information before deciding to freelance. Folmer said a workforce development program may have helped me, although he couldn’t say how. Seip said my situation shows how citizens can be hurt when they need social services and aren’t connected to a person who can explain things.
In August I appealed the state’s demand for $897. In October I had two hearings before James A. Norris, a referee for the Unemployment Compensation Board of Review. During each Norris questioned me, along with representatives of two newspapers I had been writing for regularly, about my freelancing arrangements.
After Christmas I received Norris’ decisions. He decided I wasn’t eligible for benefits but didn’t have to repay the $897 since the overpayment wasn’t my fault. But the state can take that money out of future unemployment pay if I receive it again.
I called Norris’ office to ask how he made his decision. His office pointed me to the Labor and Industry press office, where spokesman Smith said there was no way I’d talk to the referee.
“That’s not possible and highly inappropriate,” Smith said.
I asked Smith if he could answer my questions, but he said he couldn’t talk about individual cases – even to a journalist asking about her own hearings.
I could have appealed Norris’ rulings to the state Unemployment Compensation Board of Review but decided not to. There’s a chance the board would decide he was wrong and I am, in fact, eligible for benefits since I’m still looking for a full-time job. But my husband and I decided we weren’t willing to pay a lawyer to take that chance. Norris’ decision, while not everything I hoped for, is something I can live with.
My ultimate goal is to work full-time for a news organization again. That would mean regular income and, more importantly, make it much easier for me to grow as a reporter. But for now, the truth my husband keeps telling me I have to accept is that I do have a full-time job. Freelance writing certainly takes up as many hours as the Reading Eagle did, and the money I earn now is often above the threshold that would have allowed me to receive unemployment compensation when I first filed.
But could I have gotten to this point if I had only my own income available to pay the bills? Probably not.
In this recession that’s devastated so many people, there has been a lot of talk about the importance of the social safety net. How fair is it that in Pennsylvania, this piece of the safety net might disappear when a laid-off worker tries to work herself out of needing it?