Help! I accidentally listed my clients and business relationships on my California Unemployment Insurance application.

Some freelancers and independent contractors have contacted us in recent days concerned that they viewed our California Freelancer Pandemic Assistance Chart just a bit too late. These freelancers did their best to follow the ambiguous and often - conflicting - instructions on the California Employment Development Department (EDD) website and concluded that, as freelancers, they were being instructed by the EDD to list their clients and business relationships on the Unemployment Insurance form so that the EDD could "figure out" if they, the freelancers, were entitled to benefits.

As subsequent broadcasts from the Governor and the Secretary of Labor have confirmed, the EDD's language is carefully crafted to disguise its exploitation of the fact that millions of Californians have never applied for Unemployment Insurance before to build up a big database of businesses to audit and fine under AB5 during the crisis and after it subsides. Those of us who have built our livelihoods on freelancing and independent contracting are happy with our client and business relationships as they are, and we do not need the California Employment Development Department intervening in these relationships and regulating the details of their terms.

Those who inadvertently listed their clients and business relationships on their California Unemployment Insurance applications are wondering if there is any way to claw back their applications so that their clients and business relationships can avoid an EDD audit. As this is a developing situation, we are publishing this post with the most recent information we have available to us.

---

​There are two types of people reading this article: those who already had a CA EDD UI Online account prior to the pandemic, and those who applied for unemployment benefits for the first time as a result of the pandemic. Let's address each situation, in that order. Like everything on our site, this article is presented for informational purposes only. It is not legal advice, and it does not create an attorney-client relationship. You must ultimately make the decision that is best for you based on your own research and your own situation.


If you already had a UI Online account with the EDD

Those who had already applied for unemployment for other reasons prior to the pandemic appear to be having an easier time clawing back their erroneous claims. The detailed mechanisms of the California UI Online program are beyond the scope of this article, but we understand that applicants can log into the system, delete or cancel the claim in which they accidentally listed their clients and business relationships, and submit a new claim that lists only "Self-Employed" as the employer for the 1099/contract work.


If you've just filed for unemployment for the first time

If you're new to the California unemployment benefits system but have made any attempt to apply for benefits, you likely know the basics of the online application process. First, you fill out an initial unemployment insurance application on the EDD's website. Then, you wait about a week or two to get a login code. That login code allows you to create an account at UI Online where you can view and manage your unemployment claims.

The concerned individuals in this group are who listed their clients and business relationships on an unemployment insurance application and have not yet received their login code from the EDD. These individuals are wondering if there is any way to claw back their applications to avoid the possibility of their clients and business relationships being audited. As far as we know, there is no way to cancel your claim while you are waiting for the login code from the EDD. That said, it's been reported to us that once you do receive your login code, one way to cancel your claim is to log into UI Online, go to the contact page, and send the EDD a message requesting cancellation of your initial claim.

There are two caveats that you should consider before pursuing this course of action. The first is that, if you are indeed entitled to UI benefits, cancelling and resubmitting your claim will likely delay your receipt of those benefits. The second is that, even if you do cancel your claim, the EDD already has the information about your business relationships and it may or may not choose to pursue those leads.

These are nuanced issues; the legislature and the EDD created this problem, not you, and you need to ultimately make your own decision in your best interest that balances your need for timely UI benefits with the potential risk to your business relationships of maintaining your claim. Like everything on our site, these observations are provided for informational purposes only. The People v. AB5 cannot give you any specific advice regarding whether or not to withdraw your claim.

If necessary, future articles will address your options if the EDD sends you a Form DE-230, Request for Preliminary Worker Classification Assessment or Audit Lead Referral, asking for audit information for your clients and business relationships.

If you're concerned, energized, or frustrated by AB5, please sign up for our email coalition and join our Facebook group where we will be coordinating specific, scaled action items to raise awareness and get our lawmakers' attention.