For Self-Employed, Filing for Unemployment Benefits Is Getting Easier

Gig workers, freelancers and self-employed workers who lost their income due to the coronavirus may now qualify for unemployment insurance, thanks to expanded benefits included in the $2 trillion coronavirus relief package. But that lifeline, to date, has largely been a tangled mess.

The majority of self-employed workers have been unable to file claims or get answers to their questions, due in large part to the massive effort required to stand up new unemployment programs mandated by the law, signed in March.

Those roadblocks are finally starting to lift. Most states are now taking claims from self-employed workers, but the application process varies from state to state.

Relief for self-employed workers is still in limbo in more than a dozen states, including Arizona, Illinois and Nevada, where relief programs mandated in the relief act are still not operational.

Who qualifies

Under the relief law, people who are self-employed (including independent contractors and gig workers) and not eligible for regular unemployment insurance can still receive unemployment benefits if they are unable to work or are working reduced hours due to the coronavirus.

Those benefits include:

• Pandemic Unemployment Assistance: You can receive up to 39 weeks of weekly PUA benefits. The exact amount you receive is decided by your state, which has some discretion in determining eligibility and calculating benefit payouts. Some states, including California, are rolling Pandemic Unemployment Assistance out in phases — paying the minimum benefit amount initially and later increasing payments for those who qualify — in an effort to get money to people faster. This program also covers people who lack sufficient wages or work history to qualify for regular unemployment benefits.

• Federal Pandemic Unemployment Compensation: An additional $600 per week to supplement state or Pandemic Unemployment Assistance, payable until July 31 at the latest. You have to apply for unemployment through your state to get the $600 per week.

Pandemic Unemployment Assistance and Federal Pandemic Unemployment Compensation will be paid retroactively to as early as Jan. 27 (PUA) and March 29 (FPUC).

The coronavirus relief package also includes Pandemic Emergency Unemployment Compensation, which provides an additional 13 weeks of benefits for people who have already maxed out their unemployment insurance.

How to file a claim

In most states, you need to apply for, and be denied, regular unemployment benefits before you will be considered for Pandemic Unemployment Assistance. If that’s the case in your state, you may be able to apply for regular unemployment now and get the ball rolling, even if your state isn’t processing PUA claims at this time.

Once you’ve been denied regular unemployment benefits, your state agency will either automatically review your claim for Pandemic Unemployment Assistance or prompt you to submit an additional application for those benefits. In Indiana, for example, you have to proactively apply for PUA after being denied regular unemployment insurance.

A handful of states don’t require self-employed individuals to go through the regular unemployment claim process first. Instead, they have developed a separate application process for gig workers, independent contractors and those who are self-employed.

Check your state unemployment agency’s website for specific guidance on when and how to apply. Due to the overwhelming number of people claiming unemployment benefits in recent weeks, many states are asking people to apply only on certain days based on their last name or area code to prevent websites from crashing.

At least one state, Nevada, is instructing people who are self-employed to not apply for unemployment insurance at this time.

What you need

When you file your claim you will need to provide personal information (name, address, Social Security number) and work history for the past 18 to 24 months.

Your work history should include any traditional (W-2) employment, gig work and self-employment. If you were self-employed the entire time, you will typically list yourself as the employer and include your home or business address.

You will also need to verify your income. This is a bit trickier for people who don’t receive a W-2. Here’s what your state may allow as proof of earnings from self-employment or gig work.

• 2019 federal tax return, including the following when applicable:

  • Schedule C, Profit or Loss from Business.

  • Schedule F, Profit or Loss from Farming.

  • Schedule K-1, Partner's Share of Income.

• 2019 1099 form.

• Final pay stub in 2019.

• Invoice, billing or other documentation to provide proof of self-employment.

Workers who don’t fall into the self-employed bucket will still certify their income via pay stubs and a W-2.

After you apply

The next steps depend on the state. Keep an eye on your email or unemployment portal for updates or requests for additional information.

In most cases, you need to file a weekly claim certifying that you are still out of work. You will not be paid benefits for the week if you don’t file your claim, so don’t skip this step, even if your claim is still being processed.

Once your claim is approved, it will take roughly three weeks to receive your first payment. Unemployment benefits are retroactive, so your pay will be backdated.

Why the delay

The CARES Act came together quickly, moving from idea to law in less than a week, leaving little time for states to adapt. State officials also needed guidance from the U.S. Department of Labor on how to implement various pieces of the emergency package.

Every state operates its own unemployment insurance program. Rules, processes and even the technology used to process claims vary by state. Opening up benefits to people typically not eligible requires more than a few keystrokes. In some cases, states need to build an entirely new system to accept these claims. That takes time under normal circumstances, and the current situation is anything but normal.