Simon v. Unemployment Insurance Appeals Board

Opinion

RACANELLI, P. J. This is an appeal from a judgment granting a writ of mandate and ordering the California Unemployment Insurance Appeals Board to pay disability benefits to claimant Josefa Simon.

Facts

For several years, Josefa Simon worked for Winchell’s Donut Shop. As an employee, she was required to contribute to the State Disability Fund through the deduction of payroll taxes (SDI). In May 1983, Simon quit her job at Winchell’s in order to open her own independent donut shop. Although the concern did not open as soon as expected, she was operating her own donut shop by October 1983.

In November 1983, Simon was injured in an automobile accident and became disabled. As a result of her disability, she sold her shop in February 1984. Simon then applied for state unemployment disability benefits. In her application she declared she had been self-employed when injured and intended to remain self-employed when her disability ended. The Employment Development Department denied her application, stating: “You had withdrawn from the labor market prior to the date you became disabled because you were self-employed for profit. Therefore, you are not suffering a loss of wages due to your disability but instead a loss of profits.”

Simon appealed the decision to an administrative law judge, who denied her appeal following an evidentiary hearing. Appellant California Unem[1078]ployment Insurance Appeals Board (Board) denied her appeal following an independent review of the evidence.

Finally, in December 1985, the Contra Costa County Superior Court granted her petition for writ of mandate and ordered the Board to pay disability benefits. This appeal by the Board ensued.

Discussion

The Board contends that Simon was ineligible for unemployment compensation disability benefits because she was not a part of the covered labor force at the time of her disability. The Board submits that the labor force, for the purposes of the unemployment insurance system, includes those people employed or actively seeking employment and does not include those who are self-employed. We agree and reverse the decision of the trial court.

The purpose of the unemployment compensation disability benefit system is “to compensate in part for the wage loss sustained by individuals unemployed because of sickness or injury and to reduce to a minimum the suffering caused by unemployment resulting therefrom. . . .” (Unemp. Ins. Code, § 2601.)1 That section as well as related section 140.52 specifically refer to “wage loss” or losses. This system is financed by required employee contributions. Those persons who are self-employed and who earn “profits” as distinguished from “wages” are not a part of the system. However, a self-employed person can elect to be covered by the system and make his or her own contributions. (Unemp. Ins. Code, § 708.5.)