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And yet another example of the fact that any government program will ultimately have the exact opposite effect of the one intended.

>> the state has three different sets of rules<< Well, I didn't mention our other one, what they follow at Employment Development Department. See, their rule is that only employees can apply for Unemployment Insurance Benefits, so if you apply that proves you were an employee. Their other rule, for continuing benefits, is that you can only get UIB if you can't find a job, so if you are getting it that proves you can't find a job. We know this is reliable because workers who don't get benefits, after they run out, can always find a job right away. It's a very fair system, pretty much like a flat tax except in the other direction.

>>If not, the person should be reported for contracting without<< Maybe they should be reported, but it's not an accountant's job to report unless you have good liability insurance.