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Comment by tibbon | Hacker News Reader

Strange question, but couldn't you always do this?

From my understanding, unemployment insurance only required that you take no/low salary from a company. You were still able to receive money from capital-gains/investments.

Start a consulting firm/startup, pay yourself a $1 salary with stock options. Don't exercise these options for a long time (when you stop UE). I read the UE stuff time and time again in Massachusetts and kept looking for something to say that I couldn't do this but couldn't find anything that said so explicitly. I didn't end up doing consulting (just more learning/studying), but it would have worked and been legal right?

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> Strange question, but couldn't you always do this?

No. For you to receive unemployment insurance you must prove that you are actively seeking a job.

I suppose you could have invested the time into looking for a job while spending the rest of it starting a business, but this will provide you with an explicit option to start your own business. That will encourage more people to do so.

Right. Let's say I was searching for a job, but doing Rails work on the side (not a startup per-se, but you know... doing startupy like work). I could spent 1 day per week looking for a job, and 4 to 6 days a week coding for people. All the proceeds go into a consulting firm which I hold ownership of.

But yes, it is good for this to be official now.

If you do this you are probably violating the unemployment rules in your state[1]. If you reported this income with the unemployment office you will most likely have your benefits reduced or eliminated. But most people don't report this income and get away with "double dipping" which was heretofore not allowed. Technically if the government found out you did this they could penalize you retroactively. But this is a hassle and most people just get away with it unnoticed.

Even more technically, some states will even deny unemployment benefits if you are working without pay such as in a startup situation (and you are honest enough to admit this). It's not about income or full utilization, it's are you working at all.

The change in the law makes getting paid for self employment legal. Although if your self employment included revenue I assume it would still count against the amount you received from unemployment, again depending on your state.

[1] http://career-advice.monster.com/salary-benefits/benefits-in...

Remember unemployment insurance rules vary depending on the state. New York State for example asks if you are employed, not if you are drawing a salary.

True. Massachusetts asks your salary. If you're working a job that pays less than your UE benefits, then they make up the difference.

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