During the COVID-19 pandemic, millions of workers have been laid off from their jobs. Many people who have lost work during the pandemic are independent contractors. While unemployment benefits are generally only available to employees, there are two possible ways you might qualify for unemployment benefits as an independent contractor. One way you might qualify for help is through the Pandemic Unemployment Assistance program. The other way you might qualify for benefits is if you were misclassified as an independent contractor. The attorneys at Swartz Swidler can help you understand whether you are eligible for benefits and assist you with your claim.
In general, independent contractors cannot collect unemployment benefits since these benefits are designed to benefit employees who work for employers that pay unemployment taxes. The unemployment taxes are used to fund the unemployment system. Since independent contractors do not pay unemployment taxes, they are generally ineligible for unemployment benefits.
The coronavirus pandemic has changed that general rule, however. In response to COVID-19, Congress passed the Coronavirus Aid, Response, and Economic Security Act or CARES Act on March 27, 2020. This law included the Pandemic Unemployment Assistance program or PUA. PUA provides federal unemployment benefits to all workers who have lost their jobs because of the pandemic, including independent contractors. Currently, the PUA has been extended until March 14, 2021, and it is likely to be extended beyond that date if Congress passes President Biden’s coronavirus relief package.
To qualify for unemployment benefits through the PUA, you must certify one of the following:
If you qualify for PUA benefits, you must apply through your state’s unemployment office. PUA benefits are available for up to a maximum of 50 weeks or until the program ends.
Another way you might be eligible for unemployment benefits through your state is if your former employer misclassified you as an independent contractor instead of as an employee. Some employers misclassify workers to try to avoid paying payroll and other taxes. If your employer did this, you could be eligible for unemployment benefits.
Every state has rules about how it determines whether a worker is an independent contractor or an employee. Generally, however, independent contractors have their own businesses and control when and how they perform their work. If your former employer controlled your work, including the hours you reported and how you completed your tasks, you may have been misclassified.
True contractors often work in jobs that are limited in scope and time. For example, if you were contracted by a company to install a new networking system in its facility over a period of two months, you would likely be correctly classified as an independent contractor. Independent contractors’ work is typically performed on a project basis, and they typically have multiple clients for which they work. Employees normally work for a single employer indefinitely and are likelier to report their hours, work full-time, and be supervised by higher-ups within the company.
While it is common for employers to misclassify employees as independent contractors, it is illegal for them to do so. In many cases, employers that purposely misclassify employees as independent contractors do so to avoid taxes, benefits, and other costs associated with employment, including paying unemployment taxes.
If you believe that your employer misclassified you, you can apply for unemployment benefits through your state’s unemployment office. Make sure to note that you should have been considered to be an employee. If the state denies your claim, file an appeal. Explain that you were misclassified as an independent contractor by your former employer. Make sure to note that you only worked for that employer, were supervised, had to attend meetings, had to report your hours worked, and had to regularly report to your former employer’s place of business during scheduled hours.
If you believe that your employer misclassified you as an independent contractor, you might be entitled to receive unemployment benefits. In addition, your employer might have violated the state and federal wage and hour laws by misclassifying you. You and your coworkers who were similarly misclassified may want to consult with an experienced employment attorney at Swartz Swidler. You might be entitled to recover unpaid overtime and other damages through a wage and hour claim. Contact us today for help by calling 856.685.7420.
