Unemployment Benefits for the Self-Employed [COVID-19 Guide for Independent Contractors]

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In the past month, COVID-19 has affected businesses of all sizes. As employers are temporarily shutting their doors, many hard-working Americans are out of work.

As of 2019, there were a recorded 16 million self-employed individuals in the United States. Pew Research Center found that self-employed Americans (and the people working for them) account for 30% of the nation’s workforce – that’s 44 million jobs in total.

The problem? Historically, self-employed individuals were excluded from receiving unemployment benefits. However, the government has stepped in, and worked to provide relief for gig workers in the face of coronavirus.

Under new coronavirus laws, self-employed workers are now eligible for unemployment benefits. If you’re an independent contractor and wondering if you are eligible to receive unemployment benefits, check out our guide below.

How COVID-19 is affecting the self-employed

For freelancers, the work impact of COVID-19 can vary significantly based on role, but by and large, many gig workers are facing some type of fallout.

Self-employed photographers are dealing with cancelled sessions, particularly in the events space. Freelance writers may find that their contracts pause or end as companies scramble to reassess budgets for the remainder of the year. Independent aestheticians can no longer help clients with facials or waxing as communities adhere to stay-at-home directives.

The above are just a few select examples, but they illustrate the reality for the millions of Americans that are part of the self-employed community.

Many independent contractors have already lost business, and others expect that trend to continue. According to a recent study from the Freelancer’s Union, 91% of freelancers expect to lose income in the coming weeks. While no one is certain what the future months will look like for employment, there are plenty of freelancers currently hurting financially.

Coronavirus Relief Package: Unemployment Benefits Extended

In March, more than 10 million Americans applied for unemployment benefits. Among them for the first time? Gig workers.

Traditionally, self-employed individuals didn’t qualify for unemployment benefits. Independent contractors and gig workers were also excluded from any kind of unemployment restitution, but the coronavirus outbreak has changed that.

Thanks to the $2 trillion stimulus package signed into law just a few weeks ago, gig workers now qualify for certain unemployment benefits:

Families First Coronavirus Response Act (FFCRA): On March 18, 2020, President Trump signed the FFCRA into law. This act offers additional flexibility to state unemployment insurance agencies and funnels extra administrative funding to respond to the COVID-19 pandemic.
Coronavirus Aid, Relief, and Economic Security (CARES) Act: President Trump signed the CARES Act into law on March 27. 2020. This act expands all states’ abilities to offer unemployment insurance to workers impacted by the COVID-19 pandemic, including independent contractors.

What kind of unemployment benefits are available to self-employed workers?

There are several programs under the CARES Act that include benefits for self-employed workers: Pandemic Unemployment Assistance (PUA), Pandemic Unemployment Compensation (PUC), and Pandemic Emergency Unemployment Compensation (PEUC).

These programs are designed to:

Provide unemployment benefits to self-employed workers who don’t traditionally qualify. The amount you recieve is based on your previous income, and may vary based on where you live and your benefit guidelines. The minimum benefit rate is 50% of the average weekly benefit amount available in your state.

Provide supplemental benefits. Eligible workers will receive $600 a week in additional benefits for up to four months, through July 31, 2020, unless extended.
Provide extra weeks of benefits. Individuals who are still unemployed after they run out of state benefits may qualify for an additional 13 weeks of benefits. Length of state benefits vary, but the maximum is 26 weeks.

I’m self-employed. How do I know if I qualify for unemployment benefits?

Under federal law, states are now allowed to provide Pandemic Unemployment Assistance (PUA) to individuals who are self-employed. However, your eligibility depends on your personal situation and how your state elects to implement the CARES Act.

To qualify for PUA benefits, you must not be eligible for regular unemployment benefits and be unemployed, partially unemployed, or unable to work because of certain health or economic consequences of the COVID-19 pandemic. Something to keep in mind: you must first apply for regular unemployment insurance and be denied to be eligible for PUA. This process can be long, so apply as soon as possible.

Contact your state’s unemployment insurance office to learn more about the availability of unemployment benefits in your area.

Tip: The Department of Labor (DOL) offers a comprehensive list of state unemployment insurance contacts to help you find contact information.

How do I apply for unemployment benefits if I’m self-employed?

To receive unemployment insurance benefits, you need to file a claim with the unemployment insurance program in the state that you work.

Depending on the state, you may be able to file a claim online, by phone, or in person. Contact your state’s unemployment insurance program as soon as you can after becoming unemployed. It can take a while to begin receiving your benefits, so it’s wise to file your claim as soon as possible.

Many jobless individuals haven’t been able to apply for assistance in their states yet due to long call wait times and application eligibility rules, so make every effort to apply now.

While state requirements vary, generally you’ll need to provide the following information when filing an unemployment claim:

Your name, mailing address, and phone number
Social Security number or Alien Registration number
Driver’s license number
Proof of income, such as 1099 tax forms, W2 tax forms, pay stubs, and tax returns
Bank account number and routing number if your state pays unemployment through direct deposit

Note: If your work occured in multiple states, the state unemployment insurance agency you currently reside can provide more information about how to file your claim.

Other helpful resources for freelancers impacted by COVID-19

If you need additional help outside of unemployment benefits, or you find you don’t qualify for these government relief options, there are other resources to consider.

Key Takeaways

Under the CARES Act, unemployment benefits have been expanded for many American workers, including gig workers and independent contractors
Call wait times are currently very long as unemployment agencies are inundated with file claims
If you’ve lost your job, contact your state’s unemployment insurance agency as soon as possible

At Mint, we’re working hard to bring you the latest COVID-19 information to help you navigate your finances during the coronavirus outbreak. Whether you need advice for managing your student loan payments or you’re not sure how to cover bills during this time, our team is dedicated to providing the important updates you need.

Have COVID-19 tax questions? Check out our related posts on TurboTax to stay up-to-date on the tax impact of coronavirus.