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Old 08-14-2015, 03:33 PM
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Can seller of C Corp claim unemployment in CA

I'm the buyer of a C Corp in CA. The seller has put in a claim with the EDD for unemployment against our reserves. Can he do that? As far as I know, he "voluntarily quit."



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Old 08-15-2015, 01:01 PM
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I guess financial assistance for those who have lost their jobs is essentially a state function. Because of this, each state in the U.S. has the right to set its own rules for eligibility; aslongas the owner of the C corp is a shareholder/ and an EE of the C corp; the owners of a C corp would be the shareholders. If they are EEs, they MAY be able to collect unemployment but it depends on many factors. Some of these factors include whether the business is making money or if the EE is drawing a salary. However, whether or not people are entitled to unemployment benefits generally depends on some Basic Factors; 1. an EE; 2 who involuntarily lost his or her job;3 through no fault of his or her own ;4 is ready, willing and able to work, and 5. is actively seeking work.In many state laws that provide, in general, that an owner of a business , especially if he / she is a sole owner, with no partners or co-shareholders , is ineligible for unemployment benefits.So, a person who has laid himself / herself off has not really “involuntarily” lost his or her job. But, here, too, there are exceptions. The presumption against “owners” being “unemployment eligible” also seem to reflect the common practice of many business owners: their businesses do not pay unemployment taxes for themselves, and so they cannot later claim those benefits




Most states do not allow an Officer of an corp to be eligible for unemployment, but it depends on the state and their requirements. For example, In NYS, Whenever an individual, who is the officer of a corp, files a claim for benefits, and the corporation is the last employer, then the officer MAY get UN benefits. But An officer of an ongoing corp may be considered employed for NYS unemployment insurance purposes and may not be eligible for unemployment insurance benefits.

So, needless to say, Laws regarding unemployment insurance vary by state. In some states, even business owners may be paid unemployment compensation. If you are uncertain if you can apply for benefits, contact your local state employment office for more information .So you need to contact EDD of CA for more info in detail.



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