In the past, when a self-employed contractor lost a client or gig, they were out of luck when it came to receiving state benefits. But, with the mass shift in the economy due to the COVID-19 pandemic—and subsequent resources added under the Coronavirus Aid, Relief, and Economic Security (CARES) Act—there’s now relief for freelancers and self-employed folks suddenly out of work.
The law, like most laws, is full of jargon and funding programs that have nothing to do with unemployment. But don’t worry, because we’re breaking everything down for you. Here are the basics on how to get unemployment benefits if you’re self-employed.
What’s unemployment?
Regular unemployment insurance is a state benefit fund that covers traditionally employed workers and those who pay into the fund. It’s given to those who lose their jobs through no fault of their own and who meet a list of work and wage requirements.
The requirements vary by state, but unemployment insurance usually applies to full-time workers whose income is reported annually through a W-2 form.
If you get your wage information another way, like through a 1099-MISC, you’re not considered a traditional employee and normally don’t qualify for standard unemployment payments.
Self-employed unemployment benefits under the CARES Act
The CARES Act includes a program called Pandemic Unemployment Assistance (PUA), which helps those outside of the standard definition of “employee.”
Independent contractors and self-employed business owners can access this PUA money through their state unemployment office. It’s designed to cover millions of gig economy workers, from writers to delivery drivers to housekeepers to day care workers. There is, however, a catch.
According to The Authors Guild, the PUA provision isn’t specifically written to cover authors who had work simply dry up. The language of the law defines relief for those who aren’t eligible for regular unemployment benefits and are unemployed, partially unemployed, or unable or unavailable to work because of certain health or economic consequences of the COVID-19 pandemic.
Being unable or unavailable to work isn’t the same thing as having your clients disappear or refuse to pay you. Getting clarification on how PUA affects freelancers with slow work periods is happening at the state level, and some states are doing better than others.
A recent development, however, may help. The Authors Guild says the labor secretary has included an additional reason for qualifying for PUA: “The ability to continue performing customary work activities is severely limited due to the COVID-19 public health emergency. ” For most freelancers, this qualification certainly applies.
How states determine eligibility
Prior to the CARES Act, there was a patchwork system in place for deciding who’s an employee, who’s an independent contractor, and which group was eligible for benefits. For the most part, freelancers and independent contractors have traditionally been ineligible for unemployment insurance benefits. They rarely pay into the program and don’t have to.
Even under CARES, there are still some state-to-state inconsistencies on the forms and processes used for filing claims. The general rules granting unemployment relief to freelancers are the same across the country, however.
Some states have eased additional restrictions that are state-specific. For example, Nebraska has gotten rid of its requirement that you have to actively apply for jobs while receiving unemployment benefits.
Other states have reduced volunteer requirements or canceled mandated workshops or training center classes. With very few of these community programs running at the moment, the hoops for unemployment claims are reduced to showing documentation of work loss, in most cases.
States are also decreasing the amount of time you have to wait to file a claim. If you previously had to wait a week, for example, you might be able to file the day your client gives you the bad news.
What can you get paid?
Once again, this is a state-specific answer.
Each state has its own formula for compensation since it’s using its own funds. Some states pay a percentage of your full-time salary, while others use hourly models to determine your pay. Most states have limits, however. So even if you made millions at your job as a full-time Instagram influencer, the state won’t pay more than its benefits cap.
Ah, but finally some good news: The CARES Act adds a $600 weekly payment on top of whatever your state pays out. This is a federal payment that applies even if you didn’t previously make $600 a week. Just keep in mind that this “boost” of unemployment income is temporary.
How long will unemployment last?
The program provides up to 39 weeks of benefits but can start retroactively. If you’ve been without work due to COVID-19 and are just now filing your claim (or your state has just finally updated its website to allow for freelance claims), you can backdate your application to the first date you were out of work.
The earliest claim date is January 27, 2020, with coverage lasting no later than December 31, 2020.
Tips for filing a successful claim
While there are many, many articles and resource hubs for freelance unemployment, the best way to check eligibility is to visit your state’s official website.
In theory, you can also call, but most offices are running with very limited staff and hold times are reportedly monstrous. Visiting the official site also reduces the chance of accessing a disreputable site. (Unemployment scams are at an all-time high right now.)
Here’s what you need to have handy when you start your application:
- Job history
- Payment history
- Documentation of job loss, including emails from clients who fired you
- Doctor’s note saying you can’t work (if applicable)
- Notice from school saying the school is closed due to COVID-19
- Any other communications that would help the state determine you lost work through no fault of your own for reasons directly related to the coronavirus
Unemployment offices by state
Even as unemployment for freelancers gets more clarification, your first point of contact for questions is your state labor office. Here’s the website for each state office:
| State | Unemployment Office |
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Many state labor offices are also active on social media. When in doubt as to what’s happening, check its Facebook page (linked from the websites listed above) for accurate info.
Our final piece of advice? Apply as soon as you can (or are able to if your state hasn’t released a self-employed unemployment program yet). The sooner you apply the sooner you can get some relief.
Linsey Knerl is a Midwest-based author, public speaker, and member of the ASJA. She has a passion for helping small business owners do more with their resources via the latest tech and finance solutions.