I am Self-Employed or a Contractor – Do I Qualify for Unemployment Insurance?

Do I Qualify?

Bottom line up front -- if you are an independent contractor or self-employed, you may now be eligible for Unemployment Insurance. While the enrollment process is still in development, the Pennsylvania's Department of Labor & Industry (L&I) has posted the application process on their website as of 4-17-2020. The following article provides guidance and instructions on how to do so.

Federal legislation in response to COVID-19 has both been swift and piecemeal.  Additional guidance on the eligibility and availability of COVID-19 related relief programs continues to come out on a daily basis. As a result, there is still some confusion around who is eligible for the various relief programs designed for businesses and employees negatively impacted by the pandemic. This is particularly true for individuals who own their own food and farm businesses, as well as independent contractors – relief programs like Unemployment Insurance have historically not been available to these types of workers and individuals.

Both the Families First Coronavirus Relief Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security Act (CARES) has changed how Unemployment Insurance will be calculated and distributed in the wake of COVID-19, which now includes these previously ineligible class of workers. 

What Benefits Am I Now Eligible For and How Will They Be Calculated?

The FFCRA allows for states to provide Pandemic Unemployment Assistance (PUA) to individuals "who are self-employed, seeking part-time employment, or who otherwise would not qualify for regular unemployment compensation. PUA benefits are available if you are unemployed, partially unemployed, or unable or unavailable to work because of certain health or economic consequences of the COVID-19 pandemic."

According to the U.S. Department of Labor, "The PUA program provides up to 39 weeks of benefits, which are available retroactively starting with weeks of unemployment beginning on or after January 27, 2020, and ending on or before December 31, 2020."

To be sure, every state calculated Unemployment Insurance differently prior to COVID-19, and how they will determine the amount of PUA benefits for contractors and the self-employed is still in development. Unemployment Insurance has historically been available for employees who were previously on a company's payroll, were issued W-2s, and whose income was fairly steady from week to week; as a result, Unemployment Insurance has traditionally been calculated as a percentage of those average weekly earnings, up to a maximum amount.

With the FFCRA, states are now having to develop a process for determining a baseline wage for independent contractors and the self-employed who are now eligible for Unemployment Insurance through PUA. Once a process for calculating these baseline wages is developed, a personalized "weekly benefit amount" (WBA) of PUA will be determined based on the required documentation that you'll be asked to provide.

In addition to the expansion of Unemployment Insurance provided in the FFCRA, the CARES Act provides an additional $600 per week in benefits, which will supplement whatever your WBA is calculated to be in the form of PUA benefits.

How Do I Apply?

Pennsylvania's L&I administers the Unemployment Insurance program in the Commonwealth. They have a landing page specifically for questions concerning claims related to loss of work hours or unemployment due to COVID-19. 

As of 4-17-2020, L&I has also posted a link to apply for PUA benefits. As such, the self-employed and independent contractors should file their PUA claims through this online application system. L&I instructs these class of workers to not submit their claims through the regular Unemployment Insurance application processes. 

Additional Resources

Penn State Extension has also produced the following resources related to farm and food-related businesses impacted by COVID-19:

Emergency Actions for Small Farm and Food Businesses in Response to COVID-19

Small Business Benefits and the CARES ACT – What Farm and Food Producers Need to Know

COVID-19 Stimulus Benefits and Your Farm and Food Business - Recorded Webinar