Total and Partial Unemployment TPU 460.05

Type of Compensation

A. General

Section 1252 of the Unemployment Insurance Code states:

"An individual is ‘unemployed’ in any week in which he or she meets any of the following conditions: (1) Any week during which he or she performs no services and with respect to which no wages are payable to him or her."

In order to be able to determine if the claimant is employed, therefore, it is necessary to determine if he is in receipt of "wages." There are many different types of compensation paid to individuals by employers; some of these are wages and some are not.

  1. Workers’ Compensation

    While workers’ compensation is not wages, under the California Code one type of workers’ compensation payment is deductible.

    All other types are not deductible, and providing the claimant meets the availability requirements of the Code, a claimant is eligible for unemployment insurance even while receiving such payments.

    The one exception is temporary total disability indemnity payments. Section 1255.5 of the Code holds in part that a claimant may not receive workers’ compensation for temporary total disability and unemployment insurance payments for the same day or days. However, the Legislature did provide when they wrote Section 1255.5 that if the claimant receives less than his/her weekly benefit amount in temporary total disability, he/she would be eligible for reduced benefits for the days of the week during which he/she was eligible. For example, a claimant receives workers’ compensation at $10 per day. His weekly award is $65. The claimant would be eligible for $85 in unemployment insurance benefits.

    This occurred in Precedent Benefit Decision 21. The Board in reaching their decision stated:

    "During the week ending January 6, 1968, the claimant was able to work and available for work on the first four days of the week but was not able to work nor available for on January 4, 5, and 6, 1968. At least two of these days would be normal workdays in the claimant’s occupation. Under the...opinions of the Attorney General, the claimant would not be entitled to any unemployment benefits for this week since he was not able to work and available for work on all normal workdays of the week. However, Section 1255.5 has been added to the Unemployment Insurance Code, the provisions of which became effective November 8, 1967, but operative with respect to weeks of benefits claimed on and after January 1, 1968. This Section provides as follows:

    (b) . . . an individual who is ineligible to receive unemployment benefits or extended duration benefits under subdivision (a) of this Section for one or more days of a week of unemployment compensation benefits or extended duration benefits for the other days of that week is, with respect to that week, entitled to an amount of unemployment compensation benefits or extended duration computed by reducing his weekly benefit amount by the amount of temporary total disability indemnity received for that week.

    Here the claimant was ineligible to receive unemployment insurance compensation benefits under Section 1255.5(a) of the Code for three days of the week. However, he was eligible to receive unemployment compensation benefits for the other four days of the week, being able to work and available for work on those days. Thus he is entitled to receive $65 (his weekly benefit amount) less $30 (temporary total disability indemnity), or $35 . . ."

    NOTE: In the above case the claimant was eligible for the days he did not receive workers’ compensation. Had the claimant been unable to work for one full day or more of the seven-day period, due to physical or mental illness or injury, reduced benefits would be computed under the provisions of Section 1253.5, which states in part:

    ". . . he shall be paid unemployment compensation benefits at the rate of one-seventh the weekly benefit payable for that week for each day which he was available for work and able to work."

    In such cases, had the claimant been unable to work for one or more of the remaining four days of the same week, procedures in Section 1255.5 would apply first (the workers’ compensation reduction, those in Section 1253.5 second. For example, the reduction due to workers’ compensation would establish a new base amount of S30, an illness of one day would then reduce the new base of $30 by one-seventh, leaving the final amount payable at $22.

    If the claimant had been unavailable for work for more than four hours in the same week, there would be an issue of availability under Section 1253(c). The availability issue would be resolved applying the principles set forth in Sanchez and P-B-459.

  2. Exchange of Services

    A claimant may perform a personal service for another and not receive remuneration in the form of money, but in the form of a service in return. If it is established that the claimant is not involved in a commercial venture but merely helping another in his spare time in return for assistance from the other, such activity would not affect his eligibility for benefits under Section 1252 or 1279 of the Code.

    On the other hand if the claimant is performing services in his usual occupation the return services may be deemed "payment in kind" and would be deducted from the claimant’s weekly benefit amount on the basis of the prevailing hourly rate for work of that classification.

    The following guidelines should be followed in determining whether the service constitutes wages:

    1. If there was an attempt by the two parties to perform services equal to that received, that is, the two parties attempted to equalize their payments, it would indicate that the services constituted payment in kind. If the two parties were just helping each other out without any concern over the relative value of their services, this would indicate mutual assistance which would not constitute wages.
    2. If the individuals each did their tasks alone, with no or little assistance from the other party, this would indicate that the work represented a payment in kind. If each one helped the other this might indicate that the work performed was more in the nature of mutual assistance rather than payment in kind.
    3. If the service is performed in return for a service for which the claimant had already been billed, obviously the return service represents payment in kind.
  3. Prizes

    A person enters a golf tournament or tennis tournament and wins an amount of money. This money may or may not be "wages" depending on the circumstances under which it is paid.

    Section 1252 after defining an "unemployed" individual states:

    "For the purpose of this Section only the term ‘wages’ includes any and all compensation for personal services whether performed as an employee or an independent contractor."

    In order to determine that any compensation received in the form of prizes is wages, which must be deducted from the weekly benefit amount, the following conclusions must be reached:

    1. Personal services were rendered, and
    2. An employer-employee relationship existed, or
    3. An independent contractor relationship existed.

    In the case of a prize fighter, for instance, the contestant is under a contract to engage in an exhibition of boxing. The compensation he will receive is stipulated, although it may vary as to the outcome of the fight. The promoter may not dictate how the contest is to be fought. This leaves the outcome to the individual skill and ability of the fighter and the relationship is one of the independent contractor. The compensation is therefore "wages".

    The same result would occur in a golf tournament, tennis match, ski meet, track and field competition, etc. so long as the individual athlete is a professional or is under contract with the promoter to participate in the event either for a fixed price and/or prizes for winning some place in the event.

    However, if a private individual enters a tournament on his own initiative and by his skill wins a prize, such prize would not be considered "wages" as no employer-employee relationship nor independent contractor relationship exists.