COEUR d'ALENE - A state law that prevents corporate officers from collecting unemployment benefits went into effect on July 1, prompting some seasonal business owners to rethink their fiscal strategies for the coming winter.

In years past, officers who own a seasonal business were allowed to receive unemployment during the cold months, when weather-dependent work - such as landscaping or construction - slowed to a standstill.

House Bill 80, signed into law on March 16, has now eliminated that option. For many corporate officers, the news was unwelcome.

"Think about how many businesses are gonna shut down," said Frank Reed, owner of Reed Enterprises in Hayden. "I won't shut down, but I'm gonna have to go get another job this winter."

Reed's company sells landscaping supplies like bark, topsoil and rock. He usually closes in November and opens again around March 1.

Last winter, Reed collected $338 per week in unemployment benefits, he said.

"It's not good for anybody," he added. "There's just so many landscapers that work seasonal. It's prejudicial, is what it is. It's singling us out."

Officers who wish to file for unemployment must prove they are no longer associated with their companies, according to an Idaho Department of Labor press release. A formal dissolution, proof of sale, dismissal by a board of directors or a sworn affidavit may be used as proof of disassociation.

According to the statement of purpose attached to the bill, corporate officers paid $5.8 million in unemployment taxes between the fourth quarter of 2007 and the fourth quarter of 2009. During that same period - some of the worst months of the recession - officers received $42 million in unemployment benefits.

The ratio was about 7 to 1.

"There were a few folks who were kind of gaming the system," said Sen. Jim Hammond, R-Coeur d'Alene. "They would (arrange) to quit and collect unemployment, and then come back and begin to work again. That isn't what unemployment is for."

HB 80 easily passed the House, and didn't receive a single "No" vote on its way through the Senate.

Originally, corporate officers were required to pay unemployment taxes until the end of the year. But an IDL administrative order was signed this month, allowing business owners to terminate their unemployment benefits immediately, the release said.

Without unemployment coverage, corporate officers will not have to pay state unemployment taxes. They will lose their federal credit, however, which means an increase in federal unemployment taxes.

"Assuming corporate officers make at least $7,000 a year, those opting out will see their federal tax liability rise from $42 to $434 a year," the IDL release noted.

The unemployment insurance program has been operating since 1938, said IDL spokesman Bob Fick. It was not designed as a "financial bridge" from one operating season to the next.

"It just drives the cost of the program up for the other employers in the state," Fick said. "The program was not set up to become part of a financial business plan. It was set up to be a safety net."

But some companies have come to rely on those annual unemployment checks. Reed argues that the law itself is unfair.

"Why punish the people that get a job again every summer and work their butts off?" he asked.

Nicole Eiter, co-owner of CDA Structures Inc., in Hayden, said her construction company usually shuts down from December until February. Its three owners collected $4,000 in total unemployment benefits last winter.

"Not a ton of money, but pays the bills," Eiter said.

With the new law in effect, the ownership group will prepare for an off-season without the promise of unemployment dollars.

"It's definitely going to be a little different this year," Eiter said. "We have to take into consideration that we're not going to be having any income in the wintertime."

The new law only pertains to corporate officers, IDL noted; it does not affect the unemployment benefits of seasonal employees.