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Which employees are covered by Unemployment Insurance?

Most services performed by an employee for an employer are covered by unemployment insurance. Even if an employee is temporary or seasonal, or working during a probationary or training period, his or her services are probably covered by unemployment insurance. But employees who are covered by unemployment insurance will be entitled to unemployment benefits only if they earn enough wages, properly file a claim, and meet all other eligibility requirements.


Certain services performed by employees, however, will not qualify them for unemployment benefits, because the services are not covered services.


For example, services performed for a "for-profit" employer by a student as part of a program for academic credit, i.e., "co-op student," are not covered. Neither are services of high school students who are under 18 in the week they perform the service and who work restricted hours or during a school break following which they return to school.


Also not covered are services performed by a student for his or her school, if the worker is "primarily a student" at the school.

A worker for a religious organization is usually not covered, although some religious groups have volunteered to cover their workers in Michigan.


Salespeople who work for real estate brokers, or investment or insurance companies, and who are primarily paid on commission, are also not covered by unemployment insurance, nor are most home improvement or home remodeling salespersons.


Employees of public or non-profit schools are covered by unemployment insurance, but benefits are not payable to them between terms or during school holiday periods, if they are reasonably assured of returning to work following the break. The same applies to professional athletes between seasons.


All elected government officials and most appointed government officials are not covered for benefits based on their service in public office.


Some workers are regarded by employers not as employees but rather as independent contractors. In general, if a worker makes his or her services available to the public at large, and provides his or her own tools and works his or her own hours without any particular direction or control, the worker can be regarded as an independent contractor. But if the worker regularly performs almost all services for one company, and relies for his or her livelihood on performing work for that employer, he or she will probably be regarded by UIA as an employee.


A family member who works for a family corporation is also covered by unemployment benefits, but if the person claiming benefits owns, alone or in combination with a child or spouse, more than a 50% interest in the business, then benefits are limited to 7 1/2 weeks. If the worker is under age 18 and his or her parents own more than a 50% interest in the business, then that worker is also limited to 7 1/2 weeks of benefits. In order to receive even these limited benefits, though, both the employer and the claimant must disclose to UIA the claimant's relation to the business owners.


If the family business is a partnership or sole proprietorship, then a worker is not covered at all by benefits if the business is owned by the worker's child or spouse, or if the business is owned by the worker's parents and the worker is under age 18.

Related Content
 •  Purpose of this overview
 •  What is Unemployment Insurance?
 •  Employers pay either contributions (taxes) or reimbursements
 •  Who is required to pay unemployment insurance taxes?
 •  How much is the Unemployment Insurance Tax?
 •  How is the unemployment tax rate computed?
 •  Chargeable Benefits Component (CBC)
 •  Nonchargeable Benefits Component(NBC)
 •  Account Building Component (ABC)
 •  Across-the-Board Tax Reduction
 •  What is the tax rate when a new owner acquires an existing business, or businesses merge?
 •  Unemployment taxes under the Federal Unemployment Tax Act (FUTA)
 •  What happens to state and federal unemployment tax payments?
 •  Notification of state unemployment tax
 •  How and when to pay your unemployment taxes
 •  Effect of Missing Tax Report(s)
 •  Protest/Appeal Rights
 •  Tax Office Contacts
 •  Sample calculations
 •  What address should employers use to submit their tax reports and payments?
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