Unemployment Benefits for Independent Contractors

Over the years, the U.S. government helped millions of people who unexpectedly find themselves jobless through the unemployment benefits program. This program is administered at the state level and funded by FUTA (Federal Unemployment Tax Act) and SUTA (State Unemployment Tax Act) taxes.

But you may wonder whether independent contractors or self-employed people can receive these unemployment benefits.

Plus, if you are self-employed and work as a freelancer, gig worker, independent contractor, or running your own business and lose your income are traditionally do not qualify for an unemployment insurance program.

But now, amid the pandemic situation, Congress passed the CARES Act. According to this act, independent contractors are now getting unemployment benefits.

Continue reading the following article to know what the requirements are to qualify for this program, how it works, what you need to file for unemployment benefits as a self-employed individual.

How to check eligibility

The eligibility criteria for unemployment benefits for independent contractors vary from state to state. It is recommended to check eligibility as self-employed with your local labor office to see how CARES Act is implemented on the benefit program.

Self-employed or independent contractors get the PUA benefits from the state. However, they still do not qualify to apply for regular state unemployment insurance programs and be jobless or unable to work due to situations related to the Pandemic.

Through this PUA program, contractor workers get up to thirty-nine weeks of benefits. The U.S. government can extend these PUA benefits in the future if the Pandemic persists for a more extended period.

Requirements to file a claim

Most states provide unemployment benefits to independent contractors if they provide the following information when applying for unemployment insurance.

  • Name
  • Contact number
  • Full mailing address
  • State ID number
  • Driver’s license
  • Social security number or driver’s license number, and Alien registration number
  • Income proof included 1099 pay stubs, 1099 tax forms, tax returns information, and 1040 tax returns
  • Bank account number
  • Routing number for direct deposit of insurance money

➡LEARN MORE: How to Write an Appeal for Unemployment

Pandemic Unemployment Assistance for Independent Contractors

Regular unemployment insurance is designed for workers and employees those pay federal and state unemployment taxes to account for the unemployment system. That’s why in ordinary cases, an independent contractor can’t collect unemployment benefits while he is out of work because self-employed workers don’t pay these state or federal unemployment taxes.

But due to the Pandemic situation, Congress has passed the CARES Act (Coronavirus Aid, Response, and Economic Security Act) to support independent contractors during this difficult time.

Independent contractors or self-employed workers can qualify if they certify that they were diagnosed with COVID-19 or a family member of their household has been diagnosed with Coronavirus. The independent worker is providing care to that family member.

They can also qualify if they cannot work because of caregiving responsibility to a child who cannot attend school due to Pandemic or cannot go to the workplace because of quarantine restrictions.

State provides unemployment benefits if the independent contractor becomes the breadwinner after the household head is affected with Covid-19.  They can qualify for the benefits program if they had to quit their work as a result of Coronavirus or their work location was sealed as a direct result of Coronavirus health public emergency.

Self-employed persons can claim their benefits by visiting their state unemployment office or their official unemployment benefits website. If they qualify, they will get benefits that vary from state to state.

According to the CARES Act, the maximum unemployment insurance money is $600 per week that can be available from thirteen weeks to a maximum of thirty-nine weeks.