Unemployment Insurance for Self-Employed, Gig Workers and Independent Contractors

Apr 24, 2020Covid-19, News

Governmental unemployment assistance is typically not available for the self-employed, “gig” workers, independent contractors and others who do not have a traditional “employer-employee” relationship. As a result of the current COVID-19 pandemic, federal and state governments have acted to expand unemployment coverage to many of these individuals who have lost business income. Massachusetts recently opened its online “portal” (mass.gov/how-to/apply-for-pandemic-unemployment-assistance) to assist in the application process for those individuals unable to work due to the pandemic who previously were ineligible for regular or extended unemployment benefits.

The federal CARES Act created a new temporary program called Pandemic Unemployment Assistance (“PUA”) that in general provides for up to 39 weeks of unemployment assistance to individuals not otherwise eligible for other types of governmental unemployment help. The CARES Act also created a new temporary program called Federal Pandemic Unemployment Assistance (“FPUC”) that provides an additional $600 weekly benefit for those eligible for PUA.  PUA and FPUC benefits are subject to income tax reported on returns filed in 2021.

To qualify for benefits, an individual must “self-certify” certain things, including:

  • COVID-19 related matters (which are quite broad) as the cause for the individual being unable to work
  • Birthdate, Social Security Number and other contact information
  • Certain wage records

Small business owners may be eligible for PUA if the primary source of their income is work done for the business. Individuals working fewer hours due to COVID-19 which results in a loss in income may be eligible for PUA. Individuals who are able to telework with pay and individuals receiving paid sick leave or other leave will not qualify for PUA; however, individuals receiving sick leave or other paid leave benefit that is less than their customary work week pay may still be eligible for PUA.

The availability of the federal $600 per week supplement can result in total unemployment assistance payments that actually exceed the weekly income the individual would have been earned from employment.

PUA assistance is effective for weeks of unemployment beginning February 2, 2020, and ending December 26, 2020.