Collecting Unemployment Benefits for Self-Employed Workers

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Can you collect unemployment if you work as a freelancer, independent contractor, gig worker, or self-employed individual running your own business?

Self-employed workers, independent contractors, and freelance workers who lose their income are traditionally not eligible for unemployment benefits.

Unemployment Benefits for Self-Employed Workers

Because employers contribute to a fund for unemployment benefits, their employees are eligible to receive benefits from the government if they qualify after losing their job. If you are operating as self-employed, you most likely didn't pay into your state's unemployment fund.

Other than in special circumstances, if you were paid as an independent contractor and received a 1099 form, you were not considered an employee and would not be eligible for unemployment benefits. That's because eligibility for state unemployment benefits is based upon being employed by an organization that was paying into the unemployment insurance fund.

When You Are Considered an Employee

If you were hired as an independent contractor, you may still be considered an employee, and eligible for unemployment benefits, depending on the law in your state. For example, in New York, even if your employer hired you to work as an independent contractor, the law may still consider you an employee. This means you may qualify to receive unemployment insurance benefits.

Federal and state law determines whether an individual is an employee or an independent contractor.

How to Check Your Eligibility

Eligibility varies from state to state, so check with your state unemployment office to find information about who is eligible to collect unemployment compensation, and how to go about filing a claim.

When you become unemployed, it’s a good idea to check if you may be eligible for benefits right away. It can take time to begin receiving benefits if you do qualify, so you should file your claim as soon as possible.

Review information on filing for unemployment compensation and use the CareerOneStop Unemployment Benefits Finder to learn about eligibility and applying for benefits in your state.

Disaster Unemployment Assistance

If you were unemployed as a result of a major disaster, you may be eligible to receive disaster unemployment assistance. The federally funded Disaster Unemployment Assistance program (DUA) is designed to provide assistance to workers who become unemployed as the result of a presidentially declared major disaster, and who are ineligible for other unemployment benefits.

State unemployment law may provide eligibility for benefits in some other special circumstances, and your unemployment department can help you navigate the process should you become unemployed.

Self-Employment Assistance Program

The Self-Employment Assistance Program is a federal government endorsed program that offers unemployed or displaced workers in some states unemployment benefits when they are starting a business.

The Self-Employment Assistance Program pays a displaced worker an allowance, instead of regular unemployment insurance benefits, to help keep them afloat while they are establishing a business and becoming self-employed.

When You're Already Collecting Unemployment

If you are collecting unemployment based on a job you had, working freelance can impact the benefits you are receiving. For example, in New York state, you need to report income when you do freelance work, do "favors" for another business, start a business, or are or become self-employed while you are collecting unemployment benefits. If you are doing other work, you may become disqualified from receiving unemployment benefits or receive partial unemployment benefits for the week you worked.

There are similar requirements in other states. In addition, in order to claim benefits, you need to be ready, willing, and available for work. Some states require that you keep and regularly turn in an employment log documenting your efforts to regain employment.

If you are receiving unemployment benefits, make sure that you know the guidelines regarding any work you engage in. Violating the requirements can result in a loss of benefits and also substantial fines if you are discovered.

The information contained in this article is not legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to the law.