Small business owner lays off employees, has them enroll for unemployment, expects them to continue to work voluntarily.

Question

A California small business owner desperate to not lose his business with about 12-15 employees responds to COVID-19 closures by laying everyone off, having them sign up for unemployment (which, with the extra $600 per week is more than he pays them), then asks them to commit to working voluntarily for him to save his business, so he can save on payroll expenses while also getting a government business loan. The incentive is the promise of everyone being rehired and being paid big bonuses when everything opens up again, assuming his business survives. This started at the end of March and looks like it will continue for the duration of the pandemic. He is still very much the boss, and is expecting the employees to proceed with their work just as if they were still employed there and not volunteering without pay.  Is this legal? Are the employees who agreed to this in violation of the law or in any compromised position with regard to their unemployment benefits?

Neil Pedersen · Answer

No, it is not legal. 
 
No for profit employer can have volunteers working for the business without paying them at least the minimum wage and there must be a least two pay days per month.  What this employer is doing is clearly unlawful and you as the employee has the right to retroactively seek compensation for the work you have performed.  Additionally, to get unemployment insurance benefits you have to be able to say you are actively seeking full time work.  If you are lying on your application for benefits you are committing government benefit fraud.   
 
It would be very wise for you to seek out a consultation with an employment law attorney to determine your best course of action.  I would suggest you look either on this site, or go to www.cela.org, the home page for the California Employment Lawyers Association, an organization whose members are dedicated to the representation of employees against their employers. 
   
Most employment attorneys who practice this area of law offer a free or low cost consultation in the beginning and then, if the matter has merit and value, will usually agree to work on a contingency basis, meaning you can hire an attorney without paying any money until the matter results in a positive outcome for you. Many advance all the costs of the litigation as well. Do not let fear of fees and costs keep you from finding a good attorney. 
   
Good luck to you.

Maurice Mandel II · Answer

I agree with what Neil said, but write for this Caveat: you could be setting yourself up for future problems with the CUIAB for fraudulently seeking UI benefits.  They would find this out because you have to declare that you are actively seeking work and available to get alternative employment, when you are not because you are working for your former job.  You are falsifying documents on an application for benefits.  You could be disqualified from receiving benefits for years into the future, and the CUIAB could require you to return benefits.  
The big problem is that you are actively participating in a scam on the CUIAB with your employer. 
THE OPINIONS STATED HEREIN ARE BASED ON THE INFORMATION CONTAINED IN THE QUESTION,WITHOUT ANY INDEPENDENT INVESTIGATION. DO NOT RELY ON FREE LEGAL ADVICE IN A PUBLIC FORUM, EVEN MINE. CONTACT AN ATTORNEY OF YOUR CHOOSING IN YOUR LOCAL AREA TO PROTECT YOUR IMPORTANT PERSONAL RIGHTS. THIS DOES NOT CREATE AN ATTORNEY/ CLIENT RELATIONSHIP BETWEEN US.

Q: Small business owner lays off employees, has them enroll for unemployment, expects them to continue to work voluntarily.