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Ten states have begun sending unemployment benefits to self-employed workers and independent contractors, who are eligible for such payments for the first time under the CARES Act.

The new program is one way Congress boosted unemployment insurance for 2020 to help ease the economic pain for a record number of out-of-work Americans.

Yet accessing that money has been anything but painless. Workers have reported hours-long wait times on phone lines, government websites have crashed, and payments have been delayed as state offices struggle to keep up with a tsunami of claims.

For self-employed workers, the situation has been doubly confusing: States had to hurriedly build new intake systems to process claims from workers they had no wage records from, says Wayne Vroman, a labor economist at the Urban Institute.

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Now, the first states have begun processing those applications, and others are nearly ready. Here's what self-employed and freelance workers need to know to make applying easier.

Who Is Eligible for Unemployment Benefits Under the CARES Act

You typically have had to receive a W-2 form, meaning you're paid a salary by an employer, to qualify for unemployment insurance. Yet the CARES Act expanded the insurance program to cover a broader set of the work force. Under the new program, called “Pandemic Unemployment Assistance,” the following workers also qualify:

  • Self-employed individuals, which includes independent contractors and gig economy workers;
  • People without sufficient work history (most states require at least 6 months of work to qualify for normal unemployment insurance);
  • People seeking part-time work;
  • Existing claimants who have maxed out their unemployment benefits

Assistance is available for periods of unemployment between January 27, 2020 and December 31, 2020. Even if you're unsure whether you qualify for benefits, you should apply through your state anyway. Right now, with the federal expansions, most workers who've lost jobs or had their amount of work cut significantly because of the coronavirus are eligible for support. If you're a self-employed worker who applied through your state and were told you were ineligible, that's likely only because your state wasn't ready to accept applicants for the new program yet.

How to Apply for Unemployment if You're Self-Employed

To qualify for the Pandemic Unemployment Assistance (PUA) program, you need to have lost work because of the coronavirus. That includes not only employees of shuttered businesses, but also workers who are ill with COVID-19 or are caring for a family member who is ill, workers who cannot start a new job because of coronavirus-related closings, and workers who must stay home to care for children during school closures.

States are not required to ask you for proof of an illness or inability to work, but some may ask follow-up questions or for additional evidence after you first submit your application.

Under normal circumstances, unemployment offices have access to your previous earnings through state tax records. But since most people in this group of workers don't have W-2 forms, you’ll likely have to submit more information to your state offices to document your earnings.

The best documentation will likely be your 2019 tax return. You should also collect any 1099 forms, W-2s (if you have those), or paystubs from 2019 and 2020. If you don't have those, then collect records from customers of what they paid you, or records from the app if you work through a company like Lyft or Uber.

“The websites are pretty burdened, so you want to get your stuff together before you sit down to apply,” says Andrew Stettner, who studies unemployment insurance policies as a senior fellow at The Century Foundation, a left-leaning think tank.

The actual step-by-step process of applying will vary by state. Most states have so far routed self-employed and contract workers through their normal unemployment insurance program.

Once the state confirms it doesn't have work history on file for those workers, then they're classified as ineligible for a payment from the normal system, and they'll be processed for the new Pandemic Unemployment Assistance benefits.

Keep in mind that once you successfully apply, you have to regularly check in with the unemployment agency. While many states have waived rules that normally require recipients to show they're trying to find a new job, you'll still need to file a weekly certification that you remain unemployed to continue receiving payments, Stettner says.

How Much Does Unemployment Pay?

The amount you can receive from unemployment insurance depends on what state you work in, and what you earned before you lost work. (If you live in a different state than you worked in, apply through the state where you worked.)

Under normal unemployment, a general rule of thumb is that you'll receive about 40% to 50% of your previous earnings, up to your state's maximum benefit. The maximum is key, and it varies dramatically, from $235 in Mississippi to $823 in Massachusetts. In February 2020, average weekly benefits were about $387 nationwide, according to the Center on Budget and Policy Priorities.

With the new Pandemic Unemployment Assistance, the minimum amount is set to half a state's average payment. The law allows for states to send a flat initial payment to expedite the money, and then states have the option to recalculate the amount a worker is eligible for based on their earnings.

In California, for example, the initial PUA payment will be a flat $167 a week to all applicants. (California officials did not respond to a question about whether payments would later increase based on based on workers' earnings.)

All workers—those in the normal unemployment system and those in the PUA system—will receive an extra $600 a week from the federal government between March and the end of July. So that means that in Texas, for example, where self-employed workers qualify for a base payment of $207, the total weekly payment will be $807 for now.

How long you can receive payments also depends on your state rules. Many allow for up to 26 weeks, though some limit benefits to as few as 12 weeks. Expanded eligibility under the CARES Act adds 13 weeks to states' existing time limits.

Finally, some states, including California, Texas, and Pennsylvania, have said they’ll issue back payments to the date of your unemployment (assuming it’s due to coronavirus), so you won’t miss out on payments if there’s a backlog in the system. That's helpful to workers mired in weeks-long delays for payments, though it's little comfort to those who've have now gone weeks without a paycheck and have bills piling up.

Working While Receiving Unemployment Benefits

Can you still pick up a part-time or a short-term gig and remain eligible for unemployment? Yes, but there are two important things to bear in mind, says Stettner.

The first thing to consider is how much you’ll earn in this part-time work. All states have a formula, what’s called a partial benefit credit, that outlines how much you can earn while still receiving unemployment. In Pennsylvania, for example, you can earn up to 30% of your weekly unemployment payment before your part-time earnings affect your weekly unemployment payout. After that, your pay will be reduced dollar-for-dollar based on what you're earning.

Typically, as long as you’re earning less in that part-time work than you’re receiving for your regular unemployment, then you’ll remain qualified for unemployment benefits, Stettner says. And as long as you qualify for any amount through your state's partial benefit credit, then you'll still qualify for the full $600 from the federal government (until those supplemental payments end in July).

But that’s only the first of the two important criteria. The other is that you only want to take a short-term or part-time gig if you're confident that you won't quit it. If you quit, then that means you aren't involuntarily out-of-work, and that's a key requirement for any unemployment insurance, Stettner says. So if you take a position to make a little more money, but then you quit, you forfeit your unemployment insurance eligibility.

If, on the other hand, you do take intermittent work where you earn too much to qualify for unemployment, you'll simply be ineligible until you lose that work again. Most states are set up for a 52-week period of eligibility, so if you leave the system and return, you'll pick up where you were before, Vroman says.

One thing not to overlook: the extra $600 a week only last until July, so that's not something you can pick up again whenever you return.

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How Long Will it Take to Receive Unemployment Benefits for Self-Employed Workers?

Even a month after the CARES Act was signed into law, it's unclear how long it will take for self-employed or freelance workers in most states to get their first unemployment payments.

Once unemployment insurance applications are completed, OneCareerStop, a website run by the Labor Department, says payments typically take a couple weeks. But that’s under normal circumstances within the existing state systems.

Those existing systems have struggled to keep up with demand, though they are beginning to catch up. Stettner estimates that about 70% of claims filed since the middle of March have been processed now.

The Labor Department announced Thursday that 10 states have begun making Pandemic Unemployment Assistance payments. They are: Alabama, Colorado, Iowa, Kentucky, Louisiana, New York, Rhode Island, Tennessee, Texas, and Utah. A spokesperson at the Texas Workforce Commission, which runs the state's unemployment insurance program, confirmed the state has been sending out PUA payments but said it doesn’t yet have statistics on the number of self-employed workers who’ve received benefits.

Several other states are nearly ready to begin processing claims and issuing payments. Here’s the status of applications in the largest 10 states:

  • California: The state will begin accepting online applications on April 28. Check here for more details.
  • Texas: Residents can apply for PUA now through the state's normal intake system, and payments are being issued. More information is available here.
  • Florida: State officials told an Orlando TV station Wednesday that self-employed and freelance workers could apply through its normal system, but it's unclear whether the state is processing those claims yet. Officials did not respond to questions about how long it may take to send out initial payments. More information is available here.
  • New York: New York updated its application earlier this week to streamline the process for self-employed and gig workers and the state has started paying out PUA benefits. Here are answers to common questions, and a guide for applying for self-employed workers.
  • Pennsylvania: In the first two days of opening up the new system, the state received 50,000 claims from self-employed and freelance workers. State officials told the Morning Call earlier this week that the state didn’t have a precise date for when payments would be sent out. More information is here.
  • Illinois: State officials told local media that applications would be available beginning the week of May 11. The state has additional information here.
  • Ohio: Officials said the application for PUA will be available in mid-May. Benefits will be paid retroactively, based on when you were first unemployed. More information is available here.
  • Georgia: In Georgia, you have to file a normal state unemployment benefit claim first. Once you're determined ineligible for the normal system, you'll apply for PUA. Payments will be paid starting from April 4. More information on the steps is available here.
  • North Carolina: The state says it expects its system to be ready for applications on April 25. You can find details here.
  • Michigan: One of the first states to have a system for PUA up-and-running, Michigan opened up its system on April 13 and began processing claims this week. Self-employed workers who previously filed a claim through the normal system need to reapply through the PUA system. More information is available here.

If you have questions or need help with your unemployment application, your state's unemployment office is typically the best resource. The challenge is, it's exceedingly hard to get through to call center staff with the deluge of applications. You can try contacting your local American Job Center for help. (Search for contact information here.)

But Stettner says one good option may just be searching for support groups on social media and hearing from other out-of-work Americans. In the absence of enough official personalized help, grassroots groups have sprung up on Facebook, he says. Each state's system is unique, from the documents you'll have to provide to the language on the dozens of questions you'll have to answer, and people are helping each other figure it out as they go.

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