Unemployment Insurance for Corporate Officers and Business Owners: Key Eligibility Rules

Corporate officers and business owners often find themselves in a unique position regarding employment and Unemployment Insurance (UI) benefits. Unlike regular employees, they have significant control over their roles and compensation within their businesses. Because of this, the Unemployment Insurance Division has specific regulations for these individuals when seeking unemployment benefits. Understanding these rules is crucial for corporate officers and business owners who may need to navigate the complexities of filing a UI claim.

When is a corporate officer or business owner not eligible for unemployment insurance benefits?
A corporate officer or business owner is generally not eligible for UI benefits under the following conditions:

• To occupy a civil service position: If they hold a civil service position within the corporation.
• Participation in Ownership: If they own more than 5% of the corporation's equity or have debts that exceed 5% of the total corporate debt (excluding trade payables), either personally or through their spouse.

In essence, they cannot claim unemployment benefits based on wages earned from their position within the corporation.

When is a corporate officer or business owner eligible for unemployment insurance benefits?
There are situations where corporate officers or business owners may be eligible for UI benefits:

1. Part-time employment: If you work part-time for your corporation, but also have a full-time job elsewhere, and you lose your full-time position, you may be eligible for UI benefits. In this case, your earnings from the part-time corporate role will be deducted from your “partial benefit rate.”
2. Closing of business: If the corporation has permanently ceased operations, filed for formal dissolution, or declared bankruptcy, the officer or owner of the business may be eligible for UI benefits. To qualify, they must provide written evidence of one or more of the following with their UI application:
   • A document signed by the corporation verifying the termination of your official status.
   • Copy of the Tax Settlement Certification and request for definitive dissolution.
   • Deed of transfer of assets in favor of creditors.
   • A copy of the bankruptcy petition under Chapter 7 of the United States Bankruptcy Code.

By understanding the specific eligibility criteria and required documentation, these individuals can better advocate for the benefits they may be entitled to. Staying informed about these regulations ensures they can effectively manage their claims and secure the support they need during times of unemployment.

Source: Division of Unemployment Insurance | Information for corporate officers and business owners (nj.gov)