Do Commission Sales Cancel Unemployment?
Unemployment insurance provides you with an income when you lose your job, enabling you to pay your bills and other normal expenses. This income is paid for by your employer, but the state where you live controls how this money is paid out to you. When you receive a sales commission while unemployed, your state may reduce your unemployment benefits according to how much you receive.
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Purpose
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States generally provide unemployment insurance when you involuntarily lose your job or if you must quit because your work agreement has changed significantly from what your employer originally offered you. For example, if your employer refuses to pay you the agreed upon wages in your work agreement, you may quit your job and still receive unemployment insurance benefit payments.
Significance
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When receiving unemployment benefit payments, you generally receive these payments until your state's maximum benefit period has expired. If you don't receive any income from any source, your payments won't be interrupted. If you receive payments from some retirement plans, you may still receive unemployment benefit payments, although the payments may be reduced in some cases. However, commissions are generally regarded as income to you and thus will likely reduce your unemployment benefit payments.
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Disadvantage
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The reduction in your benefit payments may be partial or total. Your state decides how much your benefit payment is reduced. If your state partially lowers your benefit payment, you may receive a reduction equal to the amount of commission you earn. If your state eliminates unemployment benefits for any compensation you receive or for any work you perform, and your commissions are not enough to pay your bills, you could be put in a position of significant financial hardship.
Consideration
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In states where you do not lose your unemployment benefit payments for retirement plan withdrawals, you may opt to take money from a retirement plan to make up any of the shortfall on your unemployment benefit payments you experience from earning commission payments. Additionally, you might consider drawing money against any life insurance policies that have cash value or selling assets you no longer need to raise cash to supplement your income until you can return to work full-time.
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