Nearly every Sunday, Elise Daher chops red and green peppers into small chunks and bangs around the pots and pans in the kitchen of her Prospect Heights apartment. Always accompanied by her cat, Igby, and on one occasion, a small bottle of Jim Beam to make Hot Toddies that soothed a sore throat, she makes chili that she'll eat for lunch for the entire week. At $10 a pot, it fits her budget, now that she can no longer collect unemployment benefits.

"I used to make a decent salary and think I was poor all the time," she said. By her estimate, her annual income has gone from nearly six figures to just under $30,000.

Daher temporarily lost her eligibility for unemployment benefits because she was working in a long-term freelance position while she collected. Doing so is against the law, and Daher now finds herself subject to a penalty: She is ineligible for unemployment benefits for a total of 40 days on which she would otherwise be eligible. The days on which she works do not count toward that total. The Department of Labor also only counts 4 days of every week towards the penalty.

"It became a catch-22 because I had to get a part-time job of some sort just to survive," said the single, 41-year-old. As of mid-November, she still had 14 days left on her 40-day penalty, which began in July. Her odd jobs have included clerical work in a law firm and hostessing in a nearby restaurant.

In addition to the penalty, she was also required to reimburse the government the nearly $2000 in benefits she received. She has since been able to pay that amount through some freelancing work.

Daher's problem stems from a previous job as an art producer. She was working, but wouldn't get paid for the first month of the job. "When you file for unemployment, they ask you questions, and one of the questions is, 'Did you make more than $405 this week?' In my mind, because I wasn't getting physically paid for the first three weeks, I wasn't making $405 that week. I was making no dollars that week, so in my logic, I could file for unemployment on those weeks." When the term of that position was over, she filed for unemployment again. The Department of Labor then discovered that she had been working while collecting benefits, and informed her by letter that she is subject to the penalty.

Daher called the Department of Labor, only to find out that the letter was accurate. "When they told me, I cried. I was like 'What? I don't have a job!'" she said.

Daher feels the pinch of neither working nor collecting, but the outcome could have been worse, according to one New York attorney who specializes in labor law. "If you falsely certify to the state that you are unemployed -- totally unemployed -- then, you're basically committing fraud," said Elizabeth Tippett, an associate at Wilson Sosini Goodrich & Rosati, "And so New York State is authorized to penalize you for four days unemployment payments, all the way up to 80 days, but it's also a misdemeanor, which is punishable by a $500 fine or imprisonment up to a year." While Tippett is aware of the law, the reasoning behind it eludes her. "It doesn't make a lot of sense to me as a punishment, just because she's not really contributing to anyone and she doesn't have any income or placement," Tippett said.

Daher admits that she should reimburse the government, but she didn't expect to get caught or to suffer these consequences. "I totally agree that I owe them, but the penalty is what pisses me off," she said. "I know so many people that have [expletive] gotten away with it," she added.
Tippett encourages people not to try.

"You can't really lie to the government and not expect there to be serious consequences," she said. She urges freelancers and other people collecting benefits to check the website for The New York State Department of Labor, which has a frequently asked questions section. The Department of Labor also offers a handbook, which Tippett describes as helpful.

Daher also urges others not to do what she did, but not everyone is listening. At least one person in her social circle is aware of her situation and is working while collecting unemployment benefits nonetheless. "What's the alternative?" said the woman, who chose to remain anonymous, "You know, I can't really pack everything up and move back in with my 70-year-old mother." She is aware that what she is doing is against the law, but says it was not a consideration. "The bottom line is I need money, and it isn't money to fritter away or anything extra," she said, adding that she is $3000 behind on rent for her Manhattan apartment and is facing eviction proceedings.

Daher, however, is resolved. "People need to know because they need to be a lot more careful," she said.