Applying for unemployment as a gig or self-employed? It's complicated

Applying for unemployment as a gig or self-employed? It’s complicated

Lyft driver Steven Smith uses a disinfectant wipe to disinfect his vehicle while waiting for a call from a passenger in San Francisco, California on Thursday, March 19, 2020. Smith and other Lyft drivers have a drop in driverhood amid the bay given Area’s hiding place in response to the worldwide Coronavirus outbreak. (Jessica Christian / The San Francisco Chronicle via Getty Images)

San Francisco Chronicle / Hearst newspapers via Getty Images

Americans who have claimed unemployment benefits have been hampered by an overloaded system under pressure from the record volume during the coronavirus pandemic.

But the process is especially fraught for the self-employed and others, such as people in the so-called gig economy, who are only eligible to collect unemployment benefits.

While claiming unemployment benefits is generally a one-step process for traditional salaried workers who receive a W-2, experts in most states have turned it into a two-step process for the self-employed, giants, and other workers.

“It’s a mess,” said Stephen Wandner, a labor economist and senior fellow at the National Academy of Social Insurance.

“Congress was trying to do the right thing for this people,” he said of the vast pool of workers. But there was no easy way to do it.

“This is a complex system and people will have a hard time with it.”

Comprehensive unemployment benefits

The $ 2.2 trillion coronavirus aid package introduced last month significantly increased unemployment benefits.

The law increased the weekly salary for unemployed workers, extended the duration of those payments and extended benefits for previously ineligible workers.

The latter group includes the self-employed, gig workers such as Lyft and Uber drivers, independent contractors, those looking for part-time work, and others whose work or ability to work has been influenced by Covid-19.

They can expect unemployment benefits of up to 39 weeks, the level of which varies drastically from state to state. They receive at least half of their state’s average weekly benefit. They also receive an additional $ 600 per week through July.

The benefit grew when the Americans filed for unemployment in record numbers. In the four weeks through April 11, approximately 22 million people filed claims.

However, the challenges in implementing the new law prevented states from accepting and processing applications for gigs and other newly eligible workers.

Two-step process

Many states have since started filing applications with this group, but administrative hurdles have made the process cumbersome and confusing, experts said.

This is because the coronavirus benefit law pays them through so-called Pandemic Unemployment Assistance. PUA, according to experts, is technically not part of a state’s unemployment insurance framework.

Based on how the Coronavirus Assistance Act is written, many (if not all) states will require this extended group of workers to apply for traditional unemployment insurance – similar to how an unemployed W-2 worker would do – and not receive benefits, Wandner, former actuary with the United States Department of Labor.

After that refusal, employees would be eligible to claim benefits under the new PUA system.

“I think every state needs it,” said Wandner.

Robert Asaro-Angelo, the New Jersey Department of Labor and Workforce Development Commissioner, alluded to that perhaps counterintuitive process.

“The first step is to be denied first because of unemployment,” he said told The law clearly states that this is for individuals who would not otherwise have been eligible.

“Whatever happens, the first step is to go through the denial process.”

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Not all states – Maryland, for instance – currently allow workers to apply for PUA.

But workers need to take the proactive step of going through the process of unemployment insurance denial now instead of waiting, Wandner said.

“The sooner you get the rejection, the sooner you can apply for Pandemic Unemployment Assistance,” he said.

Ultimately, this can delay the time it takes to receive payments. There’s a silver lining: Many states are retroactively paying benefits to applicants’ unemployment date, so the first check should be bigger to make up for that delay, Wandner said.


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