Can a Business Owner Collect Unemployment in Massachusetts?

Overview

The Massachusetts General Laws Chapter 151A establishes the commonwealth's unemployment insurance laws. According to Chapter 151A, all employers within the commonwealth must pay unemployment insurance taxes for each of their part-time, temporary and full-time employees if they earn at least $1,500 in one quarter of annual employment. Claimants receive up to $625 of weekly unemployment benefits for up to 26 to 30 weeks. Claimants can receive additional benefits for their dependent children. To continue receiving unemployment insurance benefits, claimants must look for full-time work.

Business owners are generally ineligible to receive unemployment insurance benefits. The commonwealth specifically prohibits real estate sales agents, independent contractors and sole proprietors from collecting unemployment insurance benefits. However, in limited circumstances, unemployed claimants who begin their own businesses after qualifying for unemployment benefits may receive benefits if they continue looking for work.

For business owners to receive unemployment insurance benefits, they must be monetarily eligible to receive unemployment benefits by performing covered work before they filed for unemployment insurance benefits. In other words, since Massachusetts does not allow business owners to make voluntary unemployment contributions on their own behalf, they must have earned their wages through employment for covered employers. Furthermore, claimants must have valid reasons for becoming unemployed. Valid reasons include termination for a lack of work by their employers and voluntary terminations for good cause. Good cause terminations do not include employees who voluntarily terminate employment solely to start their own companies.

Claimants who qualify for unemployment benefits can begin their own businesses but may become ineligible for additional unemployment insurance benefits unless they actively look for full-time employment and remain able and ready to accept other work. If claimants devote all of their time to establishing their new companies and securing clients, they are no longer looking for available work, as stated by the Massachusetts Department of Unemployment Assistance. The department specifically states that to remain eligible for future assistance, claimants must look for full-time employment at least on a part-time basis but can devote the other half of their time to looking for other full-time employment. Furthermore, claimants must report any self-employment wages earned while receiving unemployment insurance benefits.