- For the first time ever, the third of the American workforce that relies on freelance work can apply for federal unemployment benefits to make up for lost income during the
coronavirus crisis. Freelancers and contractors are now eligible for unemployment insurance, paid sick leave, and paycheck protection loans, thanks to new legislation.- The programs are designed to stifle the economic effect of the pandemic that has already killed more than 46,000 Americans and launched an economic crisis that put 26 million Americans out of work in the past five weeks.
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Many types of freelancers, from influencers to dancers to Uber drivers, have seen paychecks and new contracts dry up amid the coronavirus crisis.
For the first time in history, the federal government is stepping in to help self-employed people who have suddenly found themselves out of work. Freelancers and contract workers qualify for unemployment benefits, paid sick leave, and paycheck protection loans, under new legislation designed to stifle the economic impact of the coronavirus pandemic.
The new benefits could help the growing segment of Americans who don't rely on a full-time job for their income. About 57 million Americans — or 35% of the country's workforce — are freelancers, according to a study by the Freelancers Union. Nearly two-thirds of small business owners, freelancers, and self-employed professionals are concerned about how the pandemic will affect their business, according to a March 24 survey conducted by accounting software provider Freshbooks.
Here's what freelancers and contractors need to know to fully take advantage of the government's aid programs.
Because of the pandemic, self-employed workers can access unemployment benefits for the first time ever
Self-employed workers should apply for unemployment insurance payments through their state's unemployment office. In another post, Business Insider's Katie Warren and Marguerite Ward can walk you through the process step by step. That check will be approximately half of what you earned before, but the max amount varies by state. Florida will pay out no more than $275 a week, while California's maximum is $450 a week, Business Insider reported.
Also, the stimulus passed by Congress in March provides an extra $600 a week through the Pandemic Unemployment Assistance program. The PUA also extended the normal duration of each state's unemployment benefits by 16 weeks.
Proving that you actually lost work may be the most challenging part for freelancers
"While self-employed and gig workers may be newly eligible for unemployment benefits, they may not qualify if they don't have the proper pay documentation," Linda O'Brien, a legal tax expert at business consultant firm Wolters Kluwer, told Business Insider. The Labor Department's CareerOneStop portal can help you check your state's requirements.
Even if the required paperwork keeps you from accessing federal aid, many industry-specific organizations are offering grants as well. Freelance writers are eligible for grants from the American Society of Journalists and Authors' Writers Emergency Assistance Fund; actors can apply for funds from the Actor's Fund relief program; recording artists can get assistance from the MusiCares Coronavirus Relief Fund; and comedians whose gigs have been canceled can apply for grants from Comedy Gives Back.
Even freelancers who haven't lost work qualify for a paycheck protection loan equal to 10 weeks' earnings
Business owners will even be able to apply to get the loans, which can be used to replace lost earnings or cover expenses such as rent, forgiven. While the program is currently broke, President Trump promised to sign a new stimulus bill allocating an additional $320 billion to the loan pot.
Interested freelancers and contractors shouldn't wait to apply once the next round of applications is released, however. The first iteration of the program ran out of money in less than two weeks, and this round has $40 billion less than that one.
While no one knows for sure this the second round of the PPP will run out of funding or when, the Chair of the Senate Committee on Small Business and Entrepreneurship, Sen. Marco Rubio, told The Wall Street Journal, "It's my view that it's possible that we could hit the cap on these funds at some point down the road."
Freelancers and contractors who get sick themselves may even qualify for paid time off through tax credits
Self-employed workers affected by the outbreak are eligible for federally funded paid time off, thanks to the Families First Coronavirus Response Act.
The FFCRA guarantees that freelancers and contractors can take up to 10 days off between April 1 and December 31 with pay to care for a sick loved one, comply with a state shelter-at-home order or a doctor recommended self-isolation, or to recover if they fall ill themselves.
The soonest freelancers will be able to access the funds is when they pay their quarterly taxes, however, according to The New York Times. The government will reimburse freelancers for the time off through a tax credit equal to your average daily earnings for each day off on your 2020 tax return, according to the FFCRA. However, the IRS isn't making affected freelancers and contractors wait until next tax season to get the money. The credit can also be deducted from your quarterly tax payments.
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