Coronavirus Stimulus and Unemployment Benefits for the Self Employed

Are you a freelancer, self-employed person, 1099 employee, or a gig worker who’s lost work thanks to the Coronavirus pandemic? The Coronavirus Relief Bill lets freelancers file for unemployment — the first time in history that 1099 workers will get major financial assistance from the government. As part of the Coronavirus stimulus, $2 trillion has been set aside to help you if you’ve lost your gig work or your client has cut your hours. 

What does the Coronavirus Relief Bill mean for you? If you’re an Uber or Lyft driver, or you make Instacart or DoorDash deliveries, you can get income relief during the Coronavirus pandemic. How can you collect unemployment while self-employed? We’ll answer your questions on unemployment benefits for the self employed, and how to collect these benefits during the Covid-19 crisis. 

Coronavirus: A Record Number of Unemployment Claims

The COVID-19 pandemic has hit the country hard. Due to the global health crisis, jobs are going into meltdown. And, a record number of people have already filed for unemployment across the US. But up until now, freelancers and gig workers had a tough time getting unemployment benefits. 

Freelancers and gig workers make up more than a third of the US workforce. And thanks to Coronavirus, gig workers’ earnings are dwindling to next to nothing. Freelancers and self-employed individuals are losing clients, jobs, and their livelihoods.   

It’s not just the extreme stress of having no cash during a Coronavirus lockdown. You’ve got the added anxiety of trying to not catch the 21st century plague. If you’re cooped up at home with the kids, finding safe and fun quarantine activities to do during lockdown can be a nightmare.

So, here’s some relief at least — the government will give income support for freelancers, gig workers, and self-employed persons who’ve lost their clients. Yes, you can now claim regular unemployment benefits and get up to $600 a week in benefits as a freelancer.

What’s the Coronavirus Relief Bill?

Called the Coronavirus Aid, Relief and Economic Security Act (CARES), the bill expands the usual unemployment benefits to more workers who’ve been impacted by the Covid-19 crisis. There are three main changes to unemployment benefits are: 

  • Bigger unemployment checks
  • Receive payments for an extended time
  • Provide unemployment benefits for gig workers, freelancers, and 1099 employees

So, this is good news if you’re a freelancer, gig worker, or are self-employed. Before the CARES Act, freelancers weren’t eligible for unemployment benefits. If your income dries up between now and the end of the year, you can file for unemployment. This is on top of the Coronavirus stimulus payment of up to $1,200 that most adults in America will receive sometime within the next three weeks

Can You Collect Unemployment if You’re a 1099 Employee?

Under the Coronavirus Relief Bill, you can receive state unemployment income assistance if you’re a 1099 employee. Typically, 1099 employees couldn’t get their hands on income benefits if they lost their job. However, with the COVID-19 pandemic, these restrictions are gone.

Collecting Unemployment While Self-Employed 

As part of the Coronavirus relief package, the government created a program called Pandemic Unemployment Assistance (PUA). This program is the part of the CARES Act that makes self-employed people eligible to collect unemployment benefits in the year 2020. Legislators recognized the need for the self employed to receive coronavirus unemployment benefits, and they delivered.

FAQs on How to Collect Unemployment as a Gig Worker

Below are the answers to your most frequently asked questions about self-employment and qualifying for unemployment benefits under the new CARES Act. 

How much unemployment can you get?

The amount you qualify for depends on how much you earned and the state you live in. Each state has its own laws on how it divides federal money to unemployed freelancers. The unemployment benefit is based on your previous four quarters of wages. According to some figures, the average weekly unemployment check in January 2020, before the CARES Act was passed, was $385. 

But remember, the CARES Act has expanded the amount of money anyone can collect if they’re unemployed. The $600 figure is the baseline amount you can now collect if you’re unemployed or have had your hours cut because of Covid-19.

Self employed workers may qualify for unemployment benefits from the Coronavirus Relief Bill of an additional $600 a week. So, you could potentially collect around $1000 a week as an unemployed freelancer. 

But what if you earned less than $600 a week as a gig worker? Will your benefits get cut? The good news for freelancers is that you still get the $600 regardless of your previous earnings. Of course, your basic unemployment benefits would be lower due to low earnings. However, you still get the $600 baseline payout that all unemployed folks get.

The $600 in extra relief is paid for four months. After this period, you’ll just receive the standard state unemployment benefits, which could be lower than $600. Each state is a little different in how long they pay unemployment benefits

With the extra $600 benefit, it’s important to remember that this is classed as income. Keep in mind this could affect your eligibility for other benefits, called the welfare cliff effect. It would be a shame to get this extra help, only to find that you make too much for welfare, but don’t make enough to live on.

Can the self employed collect unemployment if you’re just working fewer hours?

You should still get some benefits if you’re self-employed, but have a reduced workload. For most gig workers, work doesn’t abruptly end like it would if you were employed in a W2 job. If you have a severe drop in income, but can continue to do some work, partial benefits can help you survive the Coronavirus outbreak. 

How long can you collect coronavirus unemployment while self-employed?

Another change in the CARES Act was to extend the length of time you can claim income assistance. Until March 2020, you could only claim for up to 26 weeks of unemployment. The Coronavirus Relief Bill extends this time for another 13 weeks — up to nearly 10 months. 

After the 10 months or 39 weeks has ended, there could still be a possibility to qualify for benefits. The US Department of Labor has an Unemployment Extended Benefits Program. So, if there is still high unemployment at the end of 2020, your state could trigger the Extended Benefits Program. The program can provide 13 additional weeks of state unemployment assistance. 

How to File a Claim for Unemployment if You’re Self-Employed

For those who are self employed and need coronavirus related unemployment benefits, you should file for unemployment as soon as you lose your income — or a large chunk of it. The government has encouraged all states to waive the one-week waiting period. So, you could receive unemployment assistance from your first week of being out of work. Just be aware that it can take two to three weeks before you receive your first check. So, act fast to put your claim in.

In many cases, your local unemployment office may be closed due to the COVID-19 outbreak. So, you may have to apply online or by telephone. There is also a lot of pressure on the system to process the millions of claims for unemployment. So online portals may be slow and phone wait times long. 

Visit this government website to find out how to collect unemployment while self-employed or a 1099 employee. 

Coronavirus Relief Bill for Freelancers: A Takeaway Message

The major health pandemic is a worrying time for everyone. The Coronavirus Relief Bill should help to ease some of the stress in providing for your family financially. All freelancers, gig workers, self-employed, and 1099 employees can claim unemployment in 2020.