The CARES Act expanded unemployment benefits to freelancers and gig workers. Read this article to understand how to qualify and apply.
Self-Employed PUA (Pandemic Unemployment Assistance) Benefits
In an effort to reach millions of Americans who aren’t working and don’t otherwise qualify for unemployment benefits, the recently passed Coronavirus Aid, Relief and Economic Security (CARES) Act offers $2 trillion in stimulus money and expands unemployment benefits to gig workers, independent contractors, and others. This is in addition to the $1,200 one-time payment for certain individuals.
“Essentially, what the CARES Act is doing is expanding benefits to anyone who’s been impacted by the crisis,” says Shamila Ahmed, an associate attorney at Romano Law PLLC in New York. “This is something new that applies to independent contractors. If you’re an independent contractor or you’re a gig economy worker, typically you wouldn’t be able to apply to unemployment insurance.” Her firm works with business and creative professionals.
“This is something new that applies to independent contractors. If you’re an independent contractor or you’re a gig economy worker, typically you wouldn’t be able to apply to unemployment insurance.”
In addition, Scott Behren, owner of Behren Law Firm, which focuses on employment law in South Florida, explains that the government waived the waiting period to collect unemployment and relaxed the requirement that you be searching for another job. “There’s coverage for temporary furloughs which had been a question in the past,” he adds.
Furloughs allow employees to keep their employer-sponsored healthcare but they don’t work or get paid during that time.
Since the law was drafted quickly and this is the first time that independent contractors and gig workers can collect unemployment, the CARES Act has some ambiguity about how it will all work. Here’s what we do know so far.
Who qualifies for PUA unemployment benefits under the CARES Act?
Each state’s unemployment office administers benefits, so states have latitude to interpret the new law and determine eligibility.
“[Some states] may just rubber stamp everyone who applies for unemployment,” says Daniel Kalish, a managing partner at KMN, which operates in 13 cities. “Who knows how this will be applied by the states?”
Depending on how states interpret the law, some independent contractors may qualify for relief benefits because their work has dried up as a direct result of COVID-19. But Kalish adds that you’re more likely to qualify if you’re unable to work because you’re experiencing COVID-19 symptoms, you’ve received a diagnosis, or you’re caring for a family member who has symptoms and/or a diagnosis.
“Most 1099 workers are probably going to be impacted in some way or another. As long as they can give a genuine declaration [that they’ve been impacted], they’re more likely than not to be eligible.”
Other circumstances might qualify for a gig worker for benefits, too; for instance, if you quit a job due to COVID-19 or you planned to start a job at a place of employment that’s closed.
“Most 1099 workers are probably going to be impacted in some way or another,” Ahmed says. “As long as they can give a genuine declaration [that they’ve been impacted], they’re more likely than not to be eligible.”
Potentially, this might include a rideshare driver who’s had to quit because they’re immunocompromised or a musician who’s lost income because their city or state has ordered live music venues to close temporarily.
Because of this ambiguity, Kalish advises you to apply for benefits if you’re independent contractor, gig worker, or self-employed person who has lost income because of coronavirus in some way. “
What normally happens is a rule will be issued and we’ll have case law for the next three years,” he says. “We don’t have that luxury here. We just get these broad ideas.”
How unemployment benefits work
Unemployment benefits for this type of worker come in 2 parts, according to Ahmed:
- Pandemic Unemployment Assistance (PUA), and
- Pandemic Unemployment Compensation (PUC)
Traditional workers and gig workers who qualify will receive PUC through July 31 (although this date could be extended further). PUC pays $600 per week to everyone who qualifies regardless of their prior earnings.
Traditional workers who qualify will also receive unemployment insurance (UI), while gig workers will also receive PUA, since they’d quality for UI. This is in addition to the $600 per week from PUC. The amounts of UI and PUA are determined by individual states. For instance, in New York state, the minimum weekly benefit is $182, while the maximum is $504. The state determines where each person falls on that range based on their past earnings.
Of course, many gig workers have multiple jobs or clients. “If somebody has two or three jobs and they lose one job that consists of however many hours, they can apply for unemployment with regard to the job that they lost,” adds Behren.
How to apply for unemployment benefits
Since many state unemployment offices are closed due to COVID-19, your best bet is to apply online. Unfortunately, many state’s unemployment websites are crashing due to the sudden influx of inquiries, so keep trying.
Experts also stressed that self-employed people who have been denied unemployment in the past should reapply. “If you’re honest, the worst thing that will happen is they’ll say, ‘I’m sorry but you don’t qualify,’” Kalish says.
It’s not clear what kind of documentation may be needed, so Ahmed recommends having your financial records in order.
“You should be ready to certify that you have been impacted,” she says. “It’s not clear yet what they’re going to ask for, but be ready to give an honest certification under the law … Make sure you keep records of all your wages in the past year or two. When they’re looking at your application, they’re going to look at what your earnings were prior to the pandemic.”
The U.S. Department of Labor lists all state unemployment offices on its website.