Short 1099 gig between FT job and unemployment

Question

I work for a contracting agency (call it Foo) and there is a team of us at a client's site. Due to a funding/budget issue, the client has to let us all go by the end of the month, we just found out about it today. My boss wants me to stay and work a few more days for which they cannot pay my contracting agency (due to some irrelevant logistical issues) but they procured another "vendor" (call it Bar) who the client can pay and they can cut me a paycheck for those few days. I would be strictly 1099 with "Bar", so they wouldn't be paying me any benefits, just my hourly rate times the number of hours. I was a FT W-2 employee with "Foo" and they were paying my benefits, including unemployment.

I plan to file for unemployment once I finish the three day mini gig extension. However, I am confused as to what I should tell my unemployment office what my last day was and who my employer was. I had to deal with them once before in the past with a similarly unusual case scenario and the weirdness of the case postponed my request processing while I was strapped for cash (but was eventually approved) so I am hesitant to present anything but a clean cut scenario out of a fear of the same thing happening (they don't know how to process my request). Should I tell them about the three day gig at all because I am afraid they will take "Bar" as my last employer (even though it's just 1099) or should I skip it altogether? The employment commission will not know about it because it is just 1099, almost as though you paid a contractor to paint your house. At the same time, I would like to do it legally and not break any law.

The ideal scenario is if I could tell them: My last employer was "Foo" where I finished at time T0 but I earned income in T1-T3 through an undisclosed source and I do not wish to claim unemployment on those days. At the same time I do not want you to consider "Bar" as my last employer. So the complication comes in the form of a discrepancy between when my employment with the proper company ("Foo") ended and when my last day of work is (three days after the "Foo" job ended). How do I account for that transition period for the purposes of unemployment?

Answer 1

I can only speak from experience for Pennsylvania, but this is how it works there: When you are working as a 1099 contractor you are "unemployed" for purposes of claiming unemployment. As you learned the hard way: you should apply for unemployment as soon as you lose your W-2 job.

Every time you go to claim unemployment compensation the agency will ask if you have any earned income for the period you are claiming. That's where you would declare your 1099 income. Your unemployment compensation for the period will be adjusted accordingly. Basically you want to keep your unemployment claim "open" until either you secure full-time W-2 employment, or until you have exhausted your unemployment benefits. The system isn't setup to deal with any other scenario very gracefully.

Of course, never omit or falsify information provided to the unemployment agency!