Can Independent Contractors & Gig Workers Apply for Unemployment?

A few weeks ago, the American economy was the strongest it had been in decades. Then, the spread of COVID-19 turned into an outright pandemic, and ever since, nearly everything has been stuck in a holding pattern like an airplane waiting to land. In an effort to flatten the curve, nothing is moving as it did; the vast majority of us were all sent home to wait for this thing to die down.

The problem is that not everyone who is unable to find work is included in all of the federal programs the government is doling out to keep Americans afloat. Who qualifies for unemployment? 

Typically, independent contractors, gig workers, and the self-employed can’t collect unemployment. But, in case you haven’t looked around, these ain’t exactly regular times. Thanks to a last-minute provision within the stimulus bill, many Americans are getting some of the help they desperately need. But, who qualifies for unemployment when this is all over? Is there such a thing as independent contractor unemployment? 

 

Pandemic Unemployment Assistance – The Economic Recovery Bill

The passing of this stimulus bill is a big deal, especially for independent contractors and gig workers. It’s a massive win for this classification of worker because in the past, they were not eligible for the unemployment benefits traditionally offered to W-2 employees. Regardless of your employment classification, it was refreshing to see Congress and the President come together to work for so many of the American people because the unemployment numbers are not pretty. 

This is a positive evolution for the American working class. It’s high time the hourly worker got their due respect, no matter how they’re classified or by what tax code.

Currently, the unemployment rate is the highest it’s been since the Great Depression, as equally devastating to modern times as the Great Recession. The tally of people filing for unemployment is only growing by the week; we saw 4.4 million more file the week of April 24th, which brings the total number of jobless claims in 5 weeks to more than 26 million.

There’s a lot of concern about when this thing is going to end because a lot of folks are chomping at the bit to get back to work. People want normalcy. They want to receive a regular paycheck again. They want the economy moving again. Unfortunately, we just don’t have all the answers. State by state, nonessential businesses are opening with certain protocols in place, but it’s going to be a little while before we’re back to normalcy. Thanks to the current situation, and in the hopes of mitigating the severity of the impending recession, 1099 employees—gig workers and independent contractors—can collect unemployment.

The progress this marks for the gig worker and the independent contractor can’t be overstated. Since these types of workers are typically their own boss, they often fall into a gray area as far as paid sick leave, unemployment, and other benefits go. Many gig economy apps are set up in a way that forces workers into this space, as are many monthly contracts fulfilled by third parties. Whether or not a worker is considered an actual “employee” typically affects whether or not they receive employee benefits. (Usually, in the case of an app like Uber or DoorDash, if you’re not working, you’re not earning.) The benefits gig workers and independent contractors are eligible for as a result of the pandemic are not benefits they’d have received if they were laid off or let go during normal times.

Thankfully, the Coronavirus Aid, Response, and Economic Security Act (CARES Act), which includes the Pandemic Unemployment Assistance (PUA) program, is set up to help workers immediately, and payments have finally started rolling out. Workers of every kind are reflected in the bill, which, while not ideal, is still helping keep families fed. 

If you’re a gig worker and you’re wondering if you’re entitled to unemployment, this is what’s available to you:

  • The universal $1,200 sent to Americans who made less than $75,000 
  • An additional $500 for each claimable child
  • The state maximum of unemployment benefits 
  • An additional $600 per week in addition to the state funding*

*All amounts are based on previous income. 

If you haven’t filed for unemployment, you probably should. Like, right now. A lot of people have started receiving their benefits, and their $1,200 stimulus checks, so things are starting to move along. 

 

How to Check Your Eligibility for Unemployment

Right now, there are a lot of people wondering: Can you file for unemployment as an independent contractor? 

One thing that’s critical to think about is the difference between a W-2 and a 1099. Not all 1099 employees are gig workers delivering groceries or offering rides; many times, a graphic designer or copywriter can be on a 1099, and depending on the project, they may be sitting in the office every day. 

When you’re self-employed and responsible for your own taxes, you will be issued a 1099. When you’re hired on as a W-2 employee, your employer is responsible for those tax withholdings and the accrual of your benefits.

It’s essential to check with your state unemployment office because eligibility may vary by state

 

Do Most Gig Companies Put Workers on a W-2?

Most major gig companies do not hire their workers as W-2 employees. This has become a contested area of how workers are classified—or more realistically, are not. Because a lot of the gig economy players hire their workers as convenient 1099s, they aren’t required to provide benefits or safety nets. 

If you receive a 1099 form, you’re paid as an independent contractor, so you’re not considered a “standard” employee by the government. Typically, that means you wouldn’t be eligible for benefits if times were normal.

 

Adia Hires Gig Workers as Employees

Adia is different. Well before the national conversation began to recognize the importance of hourly workers in essential businesses and gig workers who help drive the U.S. economy (to the tune of $204 Billion), Adia has proudly been pro-worker. 

We’ve always put every worker that joins our community on a W-2. We believe workers should be able to choose their schedule and still be eligible to accrue benefits. With us, workers can decide their availability, and if they work enough hours a week, they’re eligible for health care and the standard benefits that apply to most full-time positions. All you need to do is download the app, finish a few simple onboarding steps, and then book any job in just one tap.

And in uncertain times like these, we’re glad to help in any way we can. If you’re currently looking for work, we’ve hired workers and matched them to gigs in nearly every industry. Join Adia today and let’s get America moving forward, even if it’s one hour at a time.

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