Unemployment Benefits for Independent Contractors in the Age of COVID-19

Melissa Hazell Davis
Article

During this challenging time, a barrage of federal, state, and local resources are now available to support business owners and protect employees. However, in an unprecedented move, under the historic $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act ("CARES"), employee benefits have also been extended to those who are self-employed, freelancers, independent contractors or part-time workers.

On April 5, 2020, the Department of Labor provided states with operating, financial, and reporting instructions for the Pandemic Unemployment Assistance  Program ("PUA") under the CARES Act.  This new, temporary federal program provides up to 39 weeks of unemployment benefits as well as funding to states for the administration of the program. Importantly, the PUA provides coverage for those who are not eligible for regular unemployment compensation benefits (including the self-employed, those with limited work history, freelancers, and those working for religious organizations). Individuals receiving PUA benefits may also receive the $600 weekly benefit amount under the Federal Pandemic Unemployment Compensation Program ("FPUC").  These benefits apply to qualifying individuals who are otherwise able to work but are unemployed, partially unemployed, or unable or unavailable to work due to one of the following reasons related to COVID-19:

  • The individual has been diagnosed with COVID-19 or is experiencing symptoms of COVID-19 and is seeking a medical diagnosis;

  • A member of the individual's household has been diagnosed with COVID-19;

  • The individual is providing care for a family member or a member of the individual's household who has been diagnosed with COVID-19;

  • A child or other person in the household for which the individual has primary caregiving responsibility is unable to attend school or another facility that is closed as a direct result of the COVID-19 public health emergency and such school or facility care is required for the individual to work;

  • The individual is unable to reach the place of employment because of a quarantine imposed as a direct result of the COVID-19 public health emergency;

  • The individual is unable to reach the place of employment because the individual has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;

  • The individual was scheduled to commence employment and does not have a job or is unable to reach the job as a direct result of the COVID-19 public health emergency;

  • The individual has become the breadwinner or major support for a household because the head of the household has died as a direct result of COVID-19;

  • The individual has to quit his or her job as a direct result of COVID-19; or

  • The individual's place of employment is closed as a direct result of the COVID-19 public health emergency.

Self-employed workers, freelancers, independent contractors, and part-time workers who are unsure about their eligibility for benefits should contact their state's unemployment commission as soon as possible as many states are experiencing an unprecedented number of new applications.

Similarly, employers who are unsure of what is required of them under the new legislation, should seek the assistance of an attorney or contact their local labor department.  Notably, employers need to re-examine the status of their employees - including all those they have classified as independent contractors - to ensure everyone is properly classified and receiving the benefits to which they are entitled.