Our client, Bill, was a one-third owner of an environmental business. His partners forced him out of the company. Although he got a fair price for his interest, he was left without a job. He needed benefits while he looked for work.

Although Bill had owned shares in the company, he had been a W-2 employee. His paycheck had all the usual deductions, including those for unemployment insurance. The Division of Unemployment Assistance (“DUA”) allows benefits to shareholders of corporations who are involuntarily separated from work, but they turned Bill down. The reason was that his company was an LLC and not a corporation.

In his appeal, we pointed out that the distinction was irrational. There are only minor, technical differences between a corporation and an LLC, and none of them affect an employee’s eligibility for benefits. This is unemployment insurance after all. Bill had paid the premiums and should be entitled to coverage when he needed it.

The DUA did not accept our arguments. They argued that an owner-employee’s salary could not be considered “wages” under their regulations. We took the appeal to court and ultimately got Bill what he was entitled to.