A Guide To Unemployment Insurance Benefits For Independent Contractors
Updated : August 4th, 2020
To help Americans make it through the crisis, the federal government had announced the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act in March. This program includes several provisions such as Pandemic Unemployment Assistance (PUA), Pandemic Emergency Unemployment Compensation (PEUC), etc.
While the PEUC program provides unemployment benefits for an additional 13 weeks, PUA, on the other hand, provides Unemployment Insurance (UI) benefits for the otherwise non-qualifying self-employed, independent contractors, etc.
In this article, we will walk you through the Unemployment Insurance Benefits for independent contractors, eligibility, and other factors.
Who Is Considered As An Independent Contractor?
Individuals who are in business for themselves that are free from direction, supervision, and control are considered as independent contractors. Signs of an independent contractor include an individual who:
- Has a well-established business
- Carries insurance
- Advertises in the print or electronic media
- Purchases a business listing or an ad
- Uses business cards, invoices, and stationery
- Has a place of business
- Pays his/her work expenses
- Invests in equipment, facilities, and supplies
- Assumes risk for both profit and loss
- Negotiates or sets his/her pay rate
- Sets his/her schedule
- Can accept or refuse work offers
- Offers services to competitive and non-competitive businesses
- Can choose to hire people
To qualify for the unemployment benefits, an independent contractor should meet several eligibility criteria. Some of them:
- The individual has been diagnosed with the Coronavirus and is receiving a medical diagnosis
- The individual’s family member is diagnosed with the Coronavirus
- The individual is giving care for a family member diagnosed with the Coronavirus
- The individual’s child or family member for whom he/she is giving care is unable to attend a school or any other facility that is closed as a direct result of the Coronavirus public health emergency
- The individual is unable to go to his/her workplace because he/she has been advised to self-quarantine by a healthcare provider
- The individual is unable to go to his/her workplace because of quarantine or other measures imposed due to the direct result of the pandemic public health emergency
- The individual’s workplace is closed due to the Coronavirus public health emergency
- The individual has quit his/her job as a direct result of the pandemic public health emergency
Unemployment Insurance Benefits For Independent Contractors: Application Process
Eligible independent contractors can apply for unemployment benefits by visiting the respective state’s Department Of Labor website. When applying, the independent contractor will be required to provide many details such as:
- Contact details
- Social Security Number
- Driving license
- Name and address of employers worked for in the past 18 months
Note that many times the application will be denied initially. But a subsequent process will allow the individual contractors to apply for the PUA program.
After applying, the contractor has to provide proof of income within 21 days of submission of the application. This can include copies of 1099 forms, federal income tax statements, etc.
The Department Of Labor will send determination notice when the application is approved that includes instructions on how to apply for weekly claims.
How Much Benefits Will The Independent Contractors Receive?
The weekly payments will be calculated on the wages and rules of the respective state. The CARES Act, however, requires the state to provide a payment of less than half of the average weekly unemployment payment in that state.
Are Independent Contractors Eligible For The Federal Pandemic Unemployment Compensation Program?
Independent contractors who receive benefits under the PUA program are eligible for the Federal Pandemic Unemployment Compensation (FPUC) program. Under the FPUC program, the eligible can receive an additional $600 benefits until 31 July 2020.
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